Sealsq Corp. (NASDAQ:LAES) had its price target reduced by Maxim Group to $1.75 from $2.25, while the firm maintained a Buy rating on the stock. The adjustment follows the company's first half of 2024 financial results, reported on September 25, which showed revenues of $4.8 million. This figure was approximately in line with the $5.0 million preannouncement made on July 3, but significantly lower than the $14.8 million reported in the first half of 2023.
The decrease in demand for legacy products has been attributed to high customer inventory levels and the transition to next-generation chips, which are designed to counter emerging quantum computing threats. Despite the lower revenues, management has reiterated expectations for a revenue increase in the second half of 2024 and growth in 2025. This outlook is supported by a $71 million pipeline for legacy products, which could expand to over $100 million following the shipment of next-generation product samples later in 2024.
Sealsq Corp.'s revenue estimates for 2024 have been revised down to $12.5 million from $18.8 million, and the 2025 forecast has been adjusted to $24.2 million from $34.7 million by Maxim Group. The company expects the second half of 2024 to show improvement over the first half, but acknowledges that the timing of some growth initiatives remains uncertain. The projected EBITDA losses have been widened due to the lower revenue estimates.
The company concluded the first half of 2024 with $19 million in cash and equivalents, having used approximately $9 million during that period. The cash burn rate is expected to decrease to around $4 million in the second half of 2024 and to reach nil by the end of 2025. Maxim Group believes that Sealsq Corp. has sufficient cash to last at least until the end of 2025.
Maxim Group's continued endorsement of a Buy rating is based on the expectation that purchasing will return to normal levels and growth initiatives will start to contribute in 2025. The firm views the first half of 2024 as the lowest point for the company. Sealsq Corp. is currently trading at 0.5 times its projected 2025 revenue, compared to a peer group average of 3.3 times. The new 12-month price target of $1.75 is based on 1.5 times the firm's estimated 2025 revenue.
SEALSQ Corp has made significant advancements in the technology sector. The company announced the development of Internet of Payment (IoP) integrated semiconductor solutions, enabling IoT devices to conduct secure and autonomous financial transactions. In addition, SEALSQ is preparing to release engineering samples of its QS7001 Quantum-Resistant secure chips by the end of the year.
The company also demonstrated the integration of the ESP32 microcontroller with its VaultIC292 Secure Element, providing advanced security for IoT devices within the Matter protocol ecosystem. Furthermore, SEALSQ's new quantum-resistant platform, QS7001, will be integrated into the next generation of WISeSat satellites, aiming to enhance secure communications in the quantum era.
SEALSQ has launched new features for digital crypto wallets designed to withstand potential threats from quantum computing. Despite a slowdown in the first half of 2024, with a preliminary unaudited revenue of approximately $5 million, SEALSQ maintains a robust new business pipeline valued at $71 million.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Sealsq Corp.'s (NASDAQ:LAES) financial situation and market performance. The company's market capitalization stands at a modest $11.17 million, reflecting its current challenges. InvestingPro Tips highlight that Sealsq is "quickly burning through cash" and "not profitable over the last twelve months," which aligns with the article's discussion of the company's cash burn and revised revenue estimates.
The stock's recent performance has been volatile, with InvestingPro data showing a significant 10.59% return over the last week, contrasting sharply with a 75.67% decline over the past year. This volatility is consistent with the InvestingPro Tip that the "stock generally trades with high price volatility."
Despite these challenges, InvestingPro Tips note that "liquid assets exceed short term obligations," which supports Maxim Group's assessment that Sealsq has sufficient cash until at least the end of 2025. Additionally, the company is "trading at a low revenue valuation multiple," which may interest value-oriented investors considering Maxim Group's maintained Buy rating.
For readers seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Sealsq Corp., providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.