- Chardan capital Analyst Brian Dobson reiterates a neutral rating on shares Presto Automation Inc PRST with a target price of $4.25.
- The analyst noted that the company’s Q2 2023 results were mixed. PRST missed the road, and its revised ARR (annual recurring revenue) forecast calls for a year-on-year decline, the analyst noted.
- The company lowered its ARR guidance to $28 million to $30 million from $33 million to $35 million. The reduction results from a change in accounting.
- The analyst believes that PRST issued warrants to a client that are now being treated as a cost of sales.
- The analyst believes that the grant of the warrant will have no impact on F2023’s reported results and should be expensed in full this fiscal year.
- Management announced a $15 million cost-cutting program, bringing the outlook more in line with the analyst’s view.
- Operating expenses for Q2 2023 were $13.6 million, approximately 34% higher than expected, and management is using this higher run rate as a starting point for its cost reduction goal.
- Savings will likely come from reducing headcount and vendors, the analyst noted.
- Management said it is in advanced contract negotiations with several potential customers and expects to announce a new agreement this year.
- The analyst sees potential to add customers similar in size to Del Taco or larger.
- The analyst’s model implies that PRST could break even at an ARR of around $100 million assuming 60% gross profit growth in the market and corporate spending.
- The analyst expects Presto to generate total sales of $59 million in the F2025E.
- The launch of Checkers maintains its positive momentum and new business announcements may be on the horizon, the analyst said.
- The analyst remains optimistic about the acquisition of PRST’s technology, but the rating keeps the rating at Neutral.
- price action: PRST shares trade 4.23% higher at $3.45 on the latest check Friday.
© 2023 Benzinga.com. Gasoline not…
[ad_2]
Source story
