On Friday, Smith Micro Software (NASDAQ:SMSI) saw its price target lowered by Roth/MKM from $4.50 to $3.00, though the firm maintained a Buy rating on the stock. The adjustment follows the company's fourth-quarter results for 2023, which fell short of expectations. The report also included guidance for a sequential decline, primarily attributed to the termination of a contract with Verizon (NYSE:VZ), a detail that was expected but still fell below analyst projections.
The analyst from Roth/MKM indicated that the current period might represent the lowest point for Smith Micro Software, with the Verizon contract no longer affecting future numbers. The firm is optimistic about the potential for growth in 2024, bolstered by an expansion with AT&T (NYSE:T) and the addition of multiple new customer wins and launches, including a significant tier 1 European player.
The company's introduction of new products such as Premium, Global, and SafePath OS is expected to open up new opportunities for Smith Micro Software. The analyst pointed out that the company's valuation is reasonable, trading at approximately 1x enterprise value to sales. However, it was noted that investors might be looking for more data points before showing greater confidence in the stock.
Despite the lowered price target, the analyst's comments reflect a belief in the company's ability to recover from the recent setback and capitalize on upcoming opportunities. Smith Micro Software's strategy to diversify its customer base and innovate with new product offerings is seen as a positive move that could lead to improved performance in the future.
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