On Monday, Wedbush demonstrated confidence in Willdan Group (NASDAQ:WLDN) by increasing the firm's price target on the stock to $35 from the previous $30, while maintaining an Outperform rating.
The adjustment follows a recent series of meetings with the company's management, which provided insights into the company's robust business pipeline and financial guidance for the coming year.
The raised price target to $35 is based on a multiple of 17.5 times the projected calendar year 2025's cash earnings per share (CEPS). The decision comes after a Midwest non-deal roadshow (NDR) last week with Willdan's management, which revealed strong visibility into the company's guidance for calendar year 2024, as well as a strong project pipeline. This includes a focus on high-margin software aimed at approximately 3,000 municipalities.
Willdan is also undergoing a transition in software delivery, which includes billable implementation work. This shift is expected to increase the recurring nature of deals, with a refresh cycle of four to five years. Moreover, the company has shown impressive monetization use cases of consulting and software engagements, which have the potential to lead to eight to ten times the project work.
"A few weeks ago, WLDN reported blowout Q4/CY23 results, while providing conservative CY24 guidance, as we believe recent deal flow (software and services) and pipeline conversion will ultimately result in strong net revenue growth throughout CY24," said the analysts.
InvestingPro Insights
Following Wedbush's recent price target increase for Willdan Group (NASDAQ:WLDN), InvestingPro data and analysis provide additional context for investors considering the company's stock. With a market capitalization of $381.43 million, Willdan's financial metrics reflect a company with growth potential. A notable PEG ratio of 0.16 suggests that the stock could be undervalued relative to its earnings growth forecast. This is reinforced by the company's strong revenue growth of 18.87% over the last twelve months, as of Q4 2023, highlighting an upward trajectory in financial performance.
InvestingPro Tips indicate that Willdan's net income is expected to grow this year, and analysts predict the company will be profitable, which aligns with Wedbush's positive outlook. Additionally, the stock's recent performance has been robust, with a 90.25% return over the last year and a 35.65% return over the last month, as of the latest data. These figures underscore the company's strong market presence and investor confidence.
Investors seeking a deeper dive into Willdan's stock analysis can find more InvestingPro Tips, including observations on the company's debt levels, liquidity, and stock performance over various timeframes. For those interested in exploring these insights further, there are 14 additional tips available on InvestingPro's platform, which can be accessed with an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.
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