What goes up fast can also come down fast, viz BigBear.ai (NYSE:BBAI) Investors learned last week. Shares of the data mining AI company were on a tremendous tear in the month leading up to its latest quarterly report. However, after the results were released last Thursday, investors did a 180-degree turn and shares fell as much as 32 percent in the subsequent session.
In Q4, revenue was roughly flat compared to the same period a year ago, hovering at $40.56 million, but $2.19 million below the consensus estimate. Additionally, EPS of -$0.14 missed street expectations by $0.09. Additionally, due to the completion of its acquisition of peer Pangiam on March 1, the company refrained from issuing an adjusted EBITDA outlook for 2024.
That said, despite investors’ displeasure with these metrics, it wasn’t all bad. For the second consecutive quarter, the company recorded positive adjusted EBITDA, reaching $3.7 million compared to a loss of $2.5 million a year ago, and for the first time since entering the market in 2021, the company turned cash flow positive in 2H23. .
For HC Wainwright analyst Scott Buck, perhaps more important than the Q4 results, the guide offered plenty to look forward to.
On top of a return to organic growth, boosted by the Pangiam acquisition, the company expects 2024 revenue to come in between $195 and $215 million vs. the consensus estimate of $173.73 million and an improvement on 2023’s $155.16 million haul.
According to Buck, these developments signal a company moving in the right direction, presenting a compelling long-term opportunity for investors.
“The improved revenue growth is coupled with ongoing cost discipline and improved gross margins, driving operating leverage,” the analyst said. “As investors focus on near-term operating results and future cash flow growth, and as the business continues to grow, we believe valuation multiples should begin to shift toward higher-quality AI peers. While there is some merger noise in the next six months, we think investors should accumulate BBAI shares ahead of strong operating results and improved business momentum in 2025.
As a result, Buck raised his price target on BBAI to a high of $5 (up from $4), suggesting the stock will rise 95% in the coming months. This reaffirms his Buy rating on the stock. (To view Buck’s track record, click here)
The rest of the street is evenly split here with 2 additional buys and holds, each with a moderate buy consensus rating. At $3.88, the average target makes room for a one-year return of ~51%. (See BBAI Stock Forecast)
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Disclaimer: The opinions expressed in this article are solely those of prominent analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.