On Thursday, Benchmark raised the price target on CareCloud (NASDAQ:CCLD) shares to $4.00, up from the previous $3.50, while maintaining a Buy rating on the healthcare technology company's stock.
The new target reflects the analyst's optimism following CareCloud's first quarter performance, which highlighted the company's efforts toward expanding profitability and free cash flow.
CareCloud's strategy, set in motion in the fourth quarter of 2023, aimed at achieving approximately $22 million in annualized cost reductions. This initiative began to show results in the first quarter, with cash from operations increasing to $4.1 million compared to $1 million in the same period the previous year. This improvement in cash flow allowed the company to reduce its debt by $2 million as of early April.
The company also plans to resume payment of preferred dividends, which were suspended in December, once free cash flow consistently exceeds the dividend requirement for several months. Additionally, CareCloud has reaffirmed its full-year 2024 revenue and Adjusted EBITDA (AEBITDA) guidance.
The revenue trend for CareCloud is expected to improve in 2024, with anticipated growth in the Wellness chronic care and remote patient monitoring solutions, which fell short of expectations in 2023.
The company also anticipates an initial impact from its artificial intelligence products later in the year, which is expected to compensate for the loss of two medSR accounts in mid-2023.
Based on the cost savings that are yet to be fully realized, there is potential for upside to the current AEBITDA guidance of $21 million to $23 million. The analyst's revised price target is supported by the improving earnings visibility for CareCloud.
InvestingPro Insights
Recent activity in CareCloud's stock suggests a noteworthy shift in market sentiment. InvestingPro Tips indicate that management's aggressive share buybacks and the anticipation of net income growth this year are pivotal factors that investors are considering. These strategic moves are underscored by a significant return over the last week and month, signaling heightened investor confidence in CareCloud's trajectory.
From a valuation perspective, CareCloud is currently trading at a low revenue valuation multiple, which may attract investors looking for potential growth at a reasonable price. However, it's important to note that the company has not been profitable over the last twelve months, a detail that underscores the importance of the company's ongoing cost reduction and revenue growth strategies.
Looking at the InvestingPro Data, CareCloud's market cap stands at $35.94M, with a trailing twelve-month revenue of $113.02M. Despite a revenue decline of over 15% in the last twelve months, the company has managed to maintain a gross profit margin close to 40%. Investors should also be aware that the price has surged over 70% in the past week, which could be reflective of the market's reaction to recent company developments and analyst upgrades.
For those considering an in-depth analysis, there are additional InvestingPro Tips available, offering a comprehensive look at CareCloud's financials and market performance. To further enrich your investment strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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