On Tuesday, Cantor Fitzgerald adjusted its price target for Rubicon Technologies Inc (NYSE:RBT), reducing it to $0.60 from the previous $1.60, while maintaining an Overweight rating on the stock.
This revision follows Rubicon's first-quarter 2024 earnings report, which presented a mix of outcomes, including challenges with revenue and customer retention. The company's efforts to transition lower margin customers away from its platform were a key factor in these headwinds.
Rubicon Technologies reported first-quarter figures with revenue at $166.1 million, adjusted gross profit at $17.1 million, and an adjusted EBITDA loss of $11.0 million. These results fell short of Cantor Fitzgerald's projections, which anticipated $171.4 million in revenue, $18.0 million in adjusted gross profit, and a smaller adjusted EBITDA loss of $3.7 million.
Following the sale of Rubicon's SaaS business, which boasted a 100% net revenue margin, Cantor Fitzgerald has also revised its net revenue estimates for 2024 and 2025. The firm's new estimates stand at $65.4 million and $87.5 million, respectively, marking a decrease from the earlier projections of $83.9 million for 2024 and $110.3 million for 2025.
Despite these adjustments, Cantor Fitzgerald remains optimistic about Rubicon's future, citing the company's role in driving innovation within an industry that has largely remained technologically stagnant. The firm emphasizes the critical nature of Rubicon's products and the potential for the company's ongoing portfolio optimization and margin improvements to contribute to a re-rating of its shares.
The new price target is based on a 2024 estimated enterprise value to net revenue multiple of 2.0x, a reduction from the previous multiple of 2.5x used to establish the original $1.60 price target.
InvestingPro Insights
As Rubicon Technologies Inc (NYSE:RBT) navigates through its recent financial challenges, real-time data from InvestingPro provides further context to the company's situation. The market capitalization of Rubicon stands at $18.64 million, reflecting the scale of the company in the current market. Despite a significant return over the last week, with a 54.55% increase in price total return, the long-term perspective shows a stock that has experienced substantial volatility. Over the last year, the price total return has plummeted by -94.01%, underscoring the challenges Rubicon faces.
InvestingPro Tips highlight some critical aspects for potential investors. Rubicon operates with a significant debt burden and has been quickly burning through cash, which are factors that could influence investment decisions. Additionally, the company does not pay a dividend to shareholders, which might affect the stock's attractiveness for income-focused investors. For more detailed analysis and further InvestingPro Tips, interested readers can explore https://www.investing.com/pro/RBT, where 17 additional tips are available to help you make more informed decisions.
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