Oppenheimer has adjusted its price target for Freightos (NASDAQ: CRGO), a digital freight platform, to $3.50 from the previous $4.50 but kept an Outperform rating on the stock. The revision follows the company's second-quarter results, which surpassed guidance but also included a reduced full-year 2024 gross booking volume (GBV) forecast by 1%.
The change is attributed to a decrease in the second half's transactions, influenced by economic challenges in Europe and delays in airline partnerships.
Freightos reported a 2% increase in its full-year 2024 revenue forecast, bolstered by the recent acquisition of Shipsta, a freight-tender procurement platform. The deal, valued at approximately $6 million, primarily in cash, is expected to add $800,000 in revenue in the second half of 2024 and between $4 million to $5 million in 2025.
The growth is anticipated from cross-selling opportunities and other synergies. However, this also implies that the organic revenue guidance for the year has been lowered by 2%.
Despite fewer overall transactions due to the ongoing crisis in the Red Sea (NYSE:SE), which has led to higher bookings per transaction, Freightos reiterated its target to achieve positive EBITDA by the end of 2026, utilizing its existing capital.
The company's financial outlook includes a 1% increase in revenue for 2024 and a 7% rise for 2025. Additionally, gross profit is projected to grow by 2% in 2024 and 7% in 2025, reflecting the contributions from the Shipsta acquisition.
In other recent news, Freightos reported a strong second-quarter performance for 2024, marked by a 32% surge in transactions and a 31% increase in gross booking value. The company also reported an 11% rise in revenue for Q2, reaching $5.7 million, and improved operational efficiency.
In a strategic move, Freightos acquired Shipsta, a logistics platform that will augment the company's services in the freight procurement sector. The acquisition is anticipated to significantly contribute to the company's revenue, with an estimated addition of approximately $800,000, mostly reflected in Q4.
Furthermore, Freightos expanded its platform by adding 14 carriers, bringing the total to 51, and saw a 16% increase in buyer users. Its subsidiary, 7LFreight, also made progress in U.S. trucking bookings.
InvestingPro Insights
After Oppenheimer's recent price target adjustment for Freightos, data from InvestingPro provides additional context for investors considering the stock. With a market capitalization of $80.14 million, Freightos holds a unique position in the digital freight market. Notably, the company's gross profit margin stands at an impressive 61.27% for the last twelve months as of Q2 2024, highlighting its ability to maintain profitability on its services despite challenging market conditions.
InvestingPro Tips suggest that Freightos holds more cash than debt, an encouraging sign of financial stability. Additionally, the company's liquid assets exceed its short-term obligations, further underscoring its capacity to manage short-term liquidity. However, analysts are skeptical about the company's profitability in the near term, and with a negative free cash flow yield, there are concerns about its cash burn rate.
For investors seeking a deeper dive into Freightos' financials and future outlook, InvestingPro offers over ten additional tips, including insights on valuation, stock performance, and dividend policy. These tips are accessible on InvestingPro's platform and can provide valuable guidance for those looking to make an informed investment decision.
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