On Friday, Needham, a notable investment firm, adjusted its price target for Urgent.ly (NASDAQ: ULY), a company specializing in roadside assistance technology. The firm reduced the target to $5.00 from the previous $7.00 while sustaining a Buy rating on the stock. This revision follows Urgent.ly's fourth-quarter results and recent company developments.
The company's financial performance and outlook prompted the adjustment. Specifically, an 8-K filing in January disclosed a significant new customer win with a top 5 global OEM, which provides a substantial opportunity for growth. However, it also reported the loss of a legacy customer that contributed approximately 25% of Urgent.ly's revenues.
Needham acknowledged the positive prospects due to the new customer relationship, emphasizing the potential for a larger opportunity in the long term. Nevertheless, the loss of the significant legacy customer has introduced a greater level of uncertainty, necessitating a more cautious valuation approach.
The new price target reflects a multiple of 7.5 times the projected adjusted EBITDA for 2026, discounted back, a decrease from the prior multiple of 10 times.
Despite the lowered revenue base, Urgent.ly has reiterated its guidance, anticipating positive non-GAAP earnings in the third quarter of 2024. The company also reaffirmed its longer-term growth and margin targets, indicating confidence in its strategic direction and financial health moving forward.
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