Analysts mixed on Audinate as shares rally
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The news: Audinate shares mounted a comeback on the ASX after shedding more than 35% on Tuesday, as analysts weighed anticipated declines in FY25 against longer-term growth.
The numbers: Shares were up 8.6% to $9 by 2:10pm AEST.
Audinate was the worst performing stock across the ASX 200 on Tuesday, diving 35.7% after the audiovisual technology company forecast declines in FY25 amid numerous anticipated headwinds.
Analysts were mixed on the stock, with Macquarie upgrading it to 'outperform' but slashing its target price 27% from $14.40 to $10.50. It also revised down its earnings per share estimated by 58% in FY25, 43% in FY26 and 35% in FY27.
Meanwhile, Morningstar lowered its fair value estimate for Audinate by 20% to $18.50 and assigned an uncertainty rating of 'high'.
Shaw and Partners, however, retained its 'hold' rating but downgraded its price target from $17.90 to $9.30.
The context: Macquarie analysts said that though expectations have rebased, "there is a visibility issue that leads to buying opportunities for investors with a longer time horizon".
"Although the scale of the FY25 downgrade is larger than we expected, [Audinate] has articulated plans to remedy known issues," they said.
Morningstar analyst Roy Van Keulen said Audinate's FY25 guidance signifies a "dramatic, unexpected slowdown". However, he noted that Audinate shares are "materially undervalued" as FY25 will likely be a transition year, after which growth will reaccelerate and margins will expand again.
Shaw and Partners analysts said Audinate's earnings update "represents and marked turnaround and is a good reminder [Audinate's] revenue is not recurring".
The sources: Macquarie research, Morningstar research, Shaw and Partners research
