Friday - Craig-Hallum initiated coverage on PowerFleet (NASDAQ:PWFL) with a Buy rating and set a price target of $9.00. The firm sees the company's recent merger with MixT as a significant growth opportunity for the fiscal year 2024 and beyond. PowerFleet's Unity software platform, which has approximately 1.8 million subscribers from both PowerFleet and MixT, is expected to drive this growth. The platform's compatibility with 130 different third-party devices is also a key strength highlighted by the firm.
The analyst noted PowerFleet's specialization in in-warehouse solutions, while MixT focuses on on-the-road telematics. The merger is anticipated to create substantial value, with the analyst suggesting a "one plus one equals three" scenario for the company's business. This combination is expected to enhance PowerFleet's software-as-a-service (SaaS) offerings significantly.
PowerFleet's ambitions to achieve and surpass the Rule of 40 metrics—where a company's combined growth rate and profit margin exceed 40%—were also emphasized. The company aims to reach this milestone in early 2026. The firm's coverage points out PowerFleet's targets for 20% revenue growth, 70% gross margins, and 30% adjusted EBITDA margins. Additionally, PowerFleet has set a goal to grow its subscriber base to over 3 million for the Unity platform.
Craig-Hallum's positive outlook on PowerFleet is based on the company's strategic goals and the expected synergies from the merger. The firm believes that long-term investors will benefit from owning shares of PowerFleet as the company works towards these ambitious financial and operational targets.
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