On Wednesday, H.C. Wainwright adjusted its price target on NexTech AR (OTC: NEXCF) shares, reducing it to $0.25 from the previous $0.50, while keeping a Buy rating on the stock. The adjustment follows NexTech AR's finalized operating results for the quarter ending June 30, 2024, which reported revenues of $1.1 million, aligning with the figures from the previous quarter. The company's gross margin saw a significant improvement to 74.0%, attributed to the offshoring of business operations to India in late 2023.
The firm noted that NexTech AR's gross margin is expected to continue expanding through the end of 2024, with projections indicating it could surpass 50.0%. The improvement in gross margin is seen as a potential driver for better operating leverage within the company. Despite these positive margins, concerns were raised regarding the stagnation of revenue growth.
The report highlighted the potential for revenue growth acceleration in the upcoming quarters as Amazon (NASDAQ:AMZN) starts promoting NexTech3D.ai's 3D modeling services to its merchants later in the year. This new development, although it may take time to scale, is anticipated to have a significant impact, potentially leading NexTech towards profitability, given the improved margin landscape.
Further optimism for revenue generation comes from the pursuit of enterprise contracts by NexTech AR. Earlier in the year, the company secured a $1.8 million 3D modeling contract signed in February 2024. With expectations for gross margin to reach 80.0% later in the year, the path to profitability appears more tangible for investors.
The price target reduction to $0.25 was attributed to the anticipation of new share issuances by NexTech AR to finance its growth initiatives. Despite this, H.C. Wainwright reaffirmed its Buy rating, signaling long-term confidence in the company's prospects.
InvestingPro Insights
As NexTech AR (OTC: NEXCF) navigates through its growth initiatives, real-time data from InvestingPro provides a deeper look into the company's financial health and market performance. According to InvestingPro, the company's market capitalization stands at $8.61 million, reflecting the scale of the business in its current state. The revenue for the last twelve months as of Q2 2024 is reported at $3.26 million, indicating the scale of operations against the backdrop of the company's growth strategies.
InvestingPro Tips highlight that analysts are expecting sales growth in the current year, which aligns with the positive outlook for NexTech AR's 3D modeling services and the pursuit of new enterprise contracts. However, the company is also quickly burning through cash and has been experiencing high price volatility, suggesting that investors may face a bumpy road ahead. While the firm is not expected to be profitable this year, the anticipated sales growth could be a silver lining for the company's future prospects.
For investors seeking a more comprehensive analysis of NexTech AR, additional insights are available through InvestingPro, which includes a total of 13 tips for the company. These additional InvestingPro Tips can offer valuable guidance for those considering an investment in NexTech AR's evolving business landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.