On Friday, Ladenburg Thalmann adjusted its stance on Energous Corp (NASDAQ:WATT), shifting the rating from Buy to Neutral and setting a price target of $2.00. The firm's reassessment of the stock comes amid concerns about the company's short-term prospects within the wireless charging market.
Energous, known for its wireless charging technology, has not seen the expected pick-up in revenue, particularly in the fourth quarter of the previous year. This, coupled with a sudden and unexplained change in corporate leadership, has contributed to the firm's decision to downgrade the stock.
Ladenburg Thalmann's analysts have expressed diminished confidence in Energous's ability to secure significant adoption and establish a strong presence in the market for at-a-distance wireless charging.
The firm has revised its revenue estimate for Energous in 2024 to just $1.1 million, with only a slight improvement projected for 2025. This anticipated slower revenue ramp has led to a reevaluation of the company's valuation.
The new valuation is based on a 3x multiple of the firm's 2025 revenue estimate of $5 million, which is then discounted back to the present at a rate of 30%. This calculation, considering an expected share count of 6 million, supports the revised $2.00 price target.
The update from Ladenburg Thalmann reflects caution regarding Energous's future financial performance. The analyst's commentary highlights the challenges faced by the company in achieving widespread commercial adoption of its wireless charging solutions.
With these factors in mind, the adjusted price target and rating are intended to align with the current outlook for the company's revenue growth and market participation.
InvestingPro Insights
As Energous Corp (NASDAQ:WATT) faces a critical period, real-time data from InvestingPro provides a deeper financial perspective on the company's current situation. With a market capitalization of just $12.23 million and revenue from the last twelve months as of Q4 2023 at a modest $0.47 million, the company's financial footprint in the wireless charging market is relatively small. The revenue decline of 44.3% over the last twelve months underscores the challenges highlighted by Ladenburg Thalmann in their reassessment of Energous's short-term prospects.
InvestingPro Tips reveal that Energous holds more cash than debt on its balance sheet, which could provide some financial flexibility. However, analysts are concerned about the company's cash burn rate and do not anticipate profitability this year. The stock's high price volatility is also noted, with a significant price drop of 80.12% over the last year, indicating investor caution. On a positive note, liquid assets exceed short-term obligations, suggesting some resilience in the face of immediate financial pressures.
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