On Tuesday, Craig-Hallum adjusted its outlook on Lantronix , Inc. (NASDAQ: NASDAQ:LTRX), reducing the price target to $6.00 from the previous $7.00. Despite the lowered target, the firm kept a Buy rating on the stock. The decision came following Lantronix's announcement of its first production follow-on order from Gridpertise. However, a decline is anticipated in the run rate business with Gridpertise heading into fiscal year 2025 (FY25), due to the expected absorption of a substantial initial order delivered this fiscal year.
Lantronix is projected to generate approximately $40 million in revenue from its dealings with Gridpertise in fiscal year 2024 (FY24). The analyst anticipates that the company's remaining business, valued around $120 million this fiscal year, could experience a growth rate exceeding 10% in the compound annual growth rate (CAGR) for FY25. This growth is expected as customer delays in the embedded solutions sector begin to resolve.
The core business of Lantronix is estimated to reach the mid-$130 million range in the next fiscal year. Coupled with the Gridpertise business, which is forecasted to maintain an annualized run rate of over $20 million, assuming a similar order rate in the second half of FY25, the company's revenue for FY25 is expected to remain roughly flat year-over-year.
Craig-Hallum's maintained Buy rating is based on the firm's belief in Lantronix's potential for growth, despite the revised estimates for FY25. The new price target of $6.00 is derived from applying a 14 times multiple to the firm's FY25 earnings per share (EPS) estimate of $0.41.
InvestingPro Insights
In light of the recent adjustments to Lantronix, Inc.'s (NASDAQ: LTRX) financial outlook, it's beneficial to consider some real-time metrics and InvestingPro Tips that may provide additional context. With a market capitalization of $129.67 million and a notable revenue growth of 10.56% over the last twelve months as of Q3 2024, Lantronix appears to be on a positive trajectory. Despite a negative P/E ratio of -19.45, the company's revenue growth and gross profit margin of 40.81% highlight its potential to improve profitability.
An InvestingPro Tip worth mentioning is that Lantronix holds more cash than debt on its balance sheet, indicating a degree of financial stability. Additionally, analysts predict the company will be profitable this year, which could be a sign of a turnaround despite the recent price drop of 43.09% over the last three months. It's also noteworthy that Lantronix has a high shareholder yield, which could be attractive to investors looking for companies with potential for capital returns.
For those considering an investment in Lantronix, it may be useful to explore the full range of InvestingPro Tips, where 10 additional insights are available. Don't forget to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for a deeper analysis and more comprehensive investment decision-making.
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