On Tuesday, Inotiv Inc. (NASDAQ:NOTV) received a downgrade from Jefferies from Buy to Hold, accompanied by a significant cut in the price target, now set at $3.75, a steep decline from the previous target of $11.50.
The downgrade followed the company's preliminary results released on Monday, which revealed a substantial revenue shortfall.
The research firm noted that Inotiv's second fiscal quarter revenue from Research Models and Services (RMS) was approximately $32 million lower than expected.
This was primarily due to decreased sales of non-human primates (NHPs), both in volume and price, as well as destocking. The firm also pointed out that there is no certainty of sales improvement for the remainder of 2024.
Additionally, the firm underscored Inotiv's strategic focus on optimizing capital allocation and managing expenses. However, concerns were raised regarding the potential breach of covenant, which could pose financial risks for the company.
As a result of these factors, the firm has adjusted its forecast for Inotiv's fiscal year 2024 adjusted EBITDA, reducing the estimate to $42 million from the prior expectation of $75 million. The revised price target of $3.75 reflects the updated financial outlook and the challenges faced by Inotiv in the near term.
InvestingPro Insights
As Inotiv Inc. navigates through its recent financial challenges, insights from InvestingPro reveal several key metrics that may be of interest to investors. The company's market capitalization stands at $107.55 million, indicating its size within the market. Despite a tough week for the stock, with a price total return of -11.46% over the past week and -30.03% over the past month, there is a silver lining. Over the last six months, the stock has experienced a substantial price uptick, with a 103.41% total return. This could suggest a level of resilience or investor confidence despite short-term volatility.
InvestingPro Tips highlight that analysts expect net income growth this year, which could signal a turnaround from previous performance, as the company has not been profitable over the last twelve months. However, the stock is currently trading at a high EBIT valuation multiple, which could be a point of caution for value-oriented investors. It's worth noting that Inotiv does not pay a dividend, which may influence the investment decisions of those seeking regular income streams.
For investors looking for a more comprehensive analysis, there are additional InvestingPro Tips available that could provide deeper insights into Inotiv's financial health and stock performance. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover more about Inotiv's prospects and industry position.
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