Needham has maintained a Buy rating on Urgent.ly (NASDAQ: ULY) but lowered its price target from $5.00 to $2.00. This adjustment comes in the wake of the company's second-quarter results and recent commentary.
Urgent.ly, a company specializing in roadside assistance, has recently renewed and expanded contracts with significant customers, which has helped to alleviate some concerns following the loss of a major client earlier in the year.
Urgent.ly has also reaffirmed its commitment to long-term revenue growth, anticipating an increase in the range of 20-30%. However, projections for top-line growth have been adjusted to the lower end of this spectrum.
The company experienced a squeeze in gross margins due to a shift in service mix, and operational expenditures surpassed expectations. These factors have led Urgent.ly to revise its forecast for reaching non-GAAP operating income breakeven, moving the target from the third quarter of 2024 to the first quarter of 2025.
The new price target of $2 reflects a 5x multiple on the firm's revised FY26E adjusted EBITDA, which has been discounted back. Needham suggests there is potential for upside in their model and the possibility for multiple expansions.
Urgently expanded its partnership with a leading global automotive OEM, extending its services to Canada. This seven-year agreement continues Urgently's support for the OEM's warranty roadside assistance program and post-warranty membership plans.
The technology stack provided by Urgently aims to enhance the efficiency and customer experience of roadside assistance. Additionally, Urgently's digital platform will support dealer-provided mobile service programs utilizing real-time data and algorithms.
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