On Monday, Stifel has updated its outlook on shares of Inseego Corp. (NASDAQ:INSG), raising the price target to $10.00 from the previous $4.20, while retaining a Hold rating on the stock. The adjustment follows Inseego's announcement of its restructuring initiatives aimed at reducing its financial obligations.
Inseego's recent press release and Securities and Exchange Commission (SEC) filing indicate that the company will be able to decrease its total debt by $84.3 million. This significant reduction will result in an improved net debt ratio of approximately 4.4x, based on $16.6 million trailing twelve months (TTM) adjusted EBITDA and $12.3 million in cash as of the first quarter of 2024.
The analyst from Stifel notes that while the newly issued debt carries relatively high-interest rates of 9.0% and 12.0%, the initiative is seen as a net positive for Inseego. The reduction in debt is a crucial step towards improving the company's leverage and is essential for its ongoing transformation.
However, the restructuring will also lead to an increase in the number of shares outstanding. The company has issued 2.4 million new shares and warrants to purchase approximately 2.1 million shares of common stock, which is expected to result in dilution for current shareholders.
Overall, Stifel views the steps taken by Inseego to address its debt leverage as a priority that could pave the way for the company to effectively move forward with its strategic plans.
In other recent news, Inseego Corp. has undertaken significant strategic measures to manage its capital structure and reduce debt. The company has repurchased and exchanged approximately $125 million of its 3.25% convertible notes due in 2025.
Inseego secured a $19.5 million loan from South Ocean Funding, LLC, among others, to finance the repurchase. An agreement was also reached to exchange $80 million of notes held by North Sound Partners and Golden Harbor Ltd. for new debt and equity.
Inseego has reported robust Q1 2024 financial results, with revenues of $45 million and an adjusted EBITDA of $3.8 million. The company anticipates Q2 revenues to range between $52 million to $56 million and adjusted EBITDA in the range of $6.5 million to $7.5 million.
TD Cowen, an analyst firm, has upgraded Inseego's price target from $3.50 to $12.00, while maintaining a Hold rating on the stock. This adjustment comes in the wake of the company's encouraging financial performance.
Inseego's recent developments also include the resignation of Stephanie Bowers from its board of directors and the Nominating and Corporate Governance Committee. These are recent developments that investors should be aware of as they monitor Inseego's financial maneuvers and its efforts to improve its balance sheet.
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