HC Wainwright Raises Price Target on AudioEye After Acquiring ADA Site Compliance From Investing.com

HC Wainwright has adjusted its rating for AudioEye (NASDAQ: AEYE), a company specializing in digital accessibility solutions. The price target was raised from $23.00 to $28.00 while maintaining a Buy rating.

The adjustment comes following AudioEye’s acquisition of ADA Site Compliance. ADA Site Compliance provides audits and best practices for website accessibility according to WCAG standards.

On Monday, AudioEye announced the purchase of ADA Site Compliance for $6.4 million, consisting of $4.0 million in cash and a $2.4 million promissory note. Although specific financials have not been released by ADA Site Compliance, it is estimated that the acquisition will provide AudioEye with approximately $2.0 million to $3.0 million in additional annual revenue.

This revenue estimate suggested that the transaction closed at a forward multiple of between 2.2x and 3.2x, which is significantly lower than AudioEye’s current enterprise value-to-sales multiple of 7.8x.

Analysts believe AudioEye can leverage ADA Site Compliance’s customer base to sell high-margin services, which could significantly increase revenue starting in 2025 and beyond. This strategy could provide an even cheaper valuation for the company. HC Wainwright has confidence in AudioEye’s proven ability to identify, acquire and integrate new businesses and suggests the acquisition should be received positively by investors.

In connection with the acquisition, AudioEye also adjusted its 2024 financial guidance and now expects annual revenue between $35.15 million and $35.25 million, an increase from the official estimate of $34.5 million to $34.8 million. Dollar. Dollar.

AudioEyes’ revenue rose to approximately $8.5 million, up 19% year-over-year. Additionally, AudioEyes reported annual recurring revenue (ARR) increased 60% quarter-over-quarter, contributing to record-breaking EBITDA of approximately $1.5 million.

In response to these positive financial results, AudioEye has revised its full-year revenue guidance to a range of $34.5 million to $34.8 million. The forecast for calculated EBITDA has also been revised upwards and is now between $6 million and $6.3 million.

In addition to these financial milestones, AudioEye has achieved HIPAA compliance and SOC 2 Type II certification, underscoring the company’s commitment to privacy and security, particularly for customers in healthcare and industries with strict privacy regulations. Obtaining these certifications solidifies AudioEye’s position as a trusted partner for organizations seeking secure and accessible websites.

Investing Pro Insights

AudioEye’s recent acquisition and positive analyst views are further supported by real-time data from InvestingPro. The company’s market capitalization is $271.44 million, reflecting investors’ confidence in its growth potential. InvestingPro Tips highlights that AudioEye has impressive gross profit margins, which is consistent with the firm’s expectation of selling high-margin services to ADA Site Compliance’s customer base.

The company’s revenue for the trailing twelve months ending Q2 2024 was $32.26 million, with revenue growth of 3.91%. This data point provides context to AudioEye’s revised 2024 revenue guidance of $35.15-35.25 million and suggests the company is on track for further growth.

InvestingPro Tips also shows that analysts expect the company to be profitable this year, consistent with the improved EBITDA forecast in the article. Additionally, the stock has shown a strong return over the last three months, with a total return of 24.59%, reflecting positive market sentiment consistent with HC Wainwright’s bullish stance.

For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for AudioEye that provide a deeper understanding of the company’s financial health and market position.

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