The morning after Symbotic (SYM -4.70%) published a fresh set of quarterly earnings, investors pounced on the stock and it rose significantly. But they weren't the only folks getting more positive about the company's future.
Analyst Robert Mason of Baird made a slight upward revision to his price target on the warehouse automation specialist's stock. At the new level, he feels that the shares could rise by 14% in the near future. Of course, it's easy to be a bull after a satisfying quarter, so let's briefly explore whether the stock really has that kind of potential.
$1 hike followed a solid quarter
Mason rather cautiously added $1.00 to his Symbotic price target for a new figure of $53 per share. He also kept his buy recommendation on the highly specialized industrial stock intact.
In digesting the company's fiscal second-quarter results -- made public in early May -- Mason was impressed with the lower costs, which he believed were due to recent innovations. He also pointed out that the company is winning new business, and we should expect to see it win new deployments over the mid-term.
There were some encouraging numbers in that earnings report. Symobtic managed to crank its revenue 59% higher on a year-over-year basis to $424 million, topping the analyst consensus. The company is young and still establishing itself, so it isn't profitable. Yet its non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) landed in the black at $22 million, against the year-ago loss of $55 million.
Is some caution warranted?
A price target 14% above where Symbiotic currently trades feels like the right value to me. The company seems to provide good products and services and is selling into a market that could use more automation to help reduce costs. What's holding me back from being a frenzied bull is the company's lack of bottom-line profitability; it hasn't yet proven it can consistently land in the black. Until it does I'll remain cautiously bullish on its prospects.
