On Wednesday, Markforged Holding Corp. (NYSE:MKFG) experienced a revision in its stock outlook as Craig-Hallum adjusted its price target and earnings per share (EPS) estimates following a recent corporate action. The firm has lowered the price target for Markforged to $3.00, a decrease from the previous target of $5.00. Despite this change, the analyst retained a Hold rating on the company's shares.
The adjustment comes in the wake of a 1:10 reverse stock split executed by Markforged last week. This move, according to the analyst, was necessary for the company to remain in compliance with New York Stock Exchange (NYSE) listing standards. In response to this change, the analyst has updated the EPS estimates to reflect the split-adjusted figures presented in their financial model.
The reverse stock split is a mechanism used by companies to consolidate the number of existing shares into fewer, proportionally more valuable shares. For Markforged, this action was taken to adhere to the NYSE's regulatory requirements, which include maintaining a minimum share price. The split does not change the company's market capitalization but does affect individual share prices and analyst price targets.
Following the reverse stock split, the new price target of $3.00 represents the analyst's adjusted expectations for the value of Markforged's shares. The Hold rating indicates that the analyst does not see significant movement in the stock's price in the near term and suggests that investors maintain their current position without buying more shares or selling existing holdings.
Markforged, as of the latest update, has not issued any public commentary on the revised price target or the analyst's remarks. The company continues to trade on the NYSE, with investors and market watchers closely observing the impact of the reverse stock split and the revised financial outlook.
In other recent news, Markforged Holding Corporation has been actively navigating through significant developments. The company recently settled its patent infringement litigation with Continuous Composites Inc.
The settlement involves an upfront payment of $18 million due in the fourth quarter of fiscal year 2024, followed by additional payments totaling $7 million over the subsequent three years. This agreement also includes cross-licensing of patent portfolios and a mutual release of claims.
Markforged also enacted a 1-for-10 reverse stock split, reducing the total number of outstanding shares from approximately 203 million to about 20.3 million. This move, approved by the board of directors, aligns with the New York Stock Exchange's minimum bid price requirement. As a result, the company's equity incentive plans and warrants have been adjusted proportionally.
In terms of financial updates, Markforged's Q2 2024 revenue decreased from $25.4 million to $21.7 million year-over-year, despite an increase in gross margins to 51.9%. The company has initiated a $25 million cost reduction plan primarily targeting R&D expenses. Despite facing potential legal challenges from Continuous Composites, Markforged projects full-year revenues between $90 million and $95 million. These are the recent developments that could have implications for the company's future performance.
InvestingPro Insights
Recent data from InvestingPro reveals a nuanced financial picture for Markforged Holding Corp. (NYSE:MKFG) that investors may find informative in the context of the recent analyst adjustments. Notably, Markforged holds more cash than debt on its balance sheet, which could be a sign of financial stability, and it boasts impressive gross profit margins of 48.42% as of the last twelve months up to Q2 2024. These margins are indicative of the company's ability to manage its cost of goods sold effectively.
However, the company is also quickly burning through cash, which may raise concerns about its long-term sustainability. Despite a significant return over the last week, with a price total return of 51.58%, the stock has experienced considerable volatility, with a 1-year price total return of -79.0%.
This volatility is reflected in its low Price / Book multiple of 0.47, suggesting that the market is valuing the company's net assets at less than their accounting worth. Investors looking for deeper insights can find additional InvestingPro Tips on Markforged's financial health and stock performance by visiting https://www.investing.com/pro/MKFG.
To further aid in investment decisions, it is worth noting that the company's market capitalization stands at $56.1M, and while analysts do not anticipate profitability this year, Markforged's liquid assets exceed its short-term obligations. For those considering the stock, there are 17 additional InvestingPro Tips available that delve into the company's financial nuances and market behavior.
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