On Thursday, Canaccord Genuity (TSX:CF) revised its stance on Hudson (NYSE:HUD) Technologies (NASDAQ:HDSN), changing the stock's rating from Buy to Hold and adjusting the price target to $10.00 from the previous $15.00. This decision follows the company's first-quarter earnings report which revealed a 16% decline in revenues and a 39% drop in GAAP diluted EPS.
Hudson Technologies' quarterly financial performance showed revenues of $65.3 million, falling slightly short of expectations by 1%, and earnings per share (EPS) at $0.20, aligning with projections. The company's first quarter is traditionally weaker, impacted by seasonal factors such as lower demand for refrigerants during cooler months and decreased procurement by the Defense Logistics Agency (DLA) under an Indefinite Delivery, Indefinite Quantity (IDIQ) contract.
The firm noted that revenue associated with the DLA was approximately $8 million for the quarter, with expectations for this to remain consistent throughout the year, representing a reduction of about $5 million per quarter compared to 2023. Management also pointed out that the quarter was challenging in comparison to the previous year, with HFC refrigerant prices averaging around $8 per pound.
The adjustment in Hudson Technologies' stock rating and price target reflects the company's recent financial results and the market's anticipation of these seasonal and contractual factors. The new price target of $10.00 signifies a recalibration of expectations in light of the company's current and expected performance.
InvestingPro Insights
As Hudson Technologies (NASDAQ:HDSN) navigates through its seasonal and contractual challenges, it's important to consider various financial metrics and analyst insights that can provide a deeper understanding of the company's position. According to InvestingPro data, Hudson Technologies has a market capitalization of $446.01 million and is trading at an earnings multiple of 8.6, which adjusts to 9.64 when looking at the last twelve months as of Q1 2024. Despite recent declines in revenue, with a -12.89% growth over the last twelve months and a -15.48% quarterly decline in Q1 2024, the company maintains a strong gross profit margin of 37.03%.
InvestingPro Tips highlight that Hudson Technologies holds more cash than debt, suggesting a stable financial footing, and boasts a high shareholder yield. Moreover, the company's stock is currently in oversold territory according to the Relative Strength Index (RSI), which could indicate potential for a rebound. It's also worth noting that while two analysts have revised their earnings downwards for the upcoming period, others predict the company will remain profitable this year, supported by profitability over the last twelve months.
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