Stifel's analyst J. Parker Lane has adjusted the price target for Weave Communications (WEAV, Financial), trimming it down to $16 from the previous $20 while maintaining a Buy rating for the stock. Despite the shares having underperformed throughout the year, the firm sees a promising risk/reward opportunity ahead of the company's earnings report next month.
Stifel highlights Weave's platform as a cost-effective solution that enhances efficiency, positioning it as a strong contender in niche markets such as dental, optometry, veterinary, and other specialty medical fields. The analyst believes that these sectors provide a buffer against broader market volatility caused by tariffs and macroeconomic factors, potentially giving Weave an edge over its software industry peers.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Weave Communications Inc (WEAV, Financial) is $16.14 with a high estimate of $20.00 and a low estimate of $13.00. The average target implies an upside of 71.73% from the current price of $9.40. More detailed estimate data can be found on the Weave Communications Inc (WEAV) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, Weave Communications Inc's (WEAV, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Weave Communications Inc (WEAV, Financial) in one year is $11.76, suggesting a upside of 25.11% from the current price of $9.4. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Weave Communications Inc (WEAV) Summary page.
WEAV Key Business Developments
Release Date: February 20, 2025
- Revenue: $54.2 million in Q4, reflecting nearly 19% growth year over year.
- Gross Margin: Improved to 72.6% in Q4, marking the 12th consecutive quarter of improvement.
- Net Income: $2.4 million or $0.03 per share in Q4.
- Free Cash Flow: $6.1 million in Q4, representing 109% year-over-year growth.
- Total Revenue for 2024: $204.3 million, a 20% increase from the previous year.
- Operating Income: Positive $1.8 million in Q4, a $3.5 million improvement from the previous year.
- Net Revenue Retention Rate: 90% in Q4, up from 95% last year.
- Cash and Short-term Investments: $99.1 million at the end of the year.
- Customer Locations: Nearly 35,000 on the platform, a 15% increase.
- 2025 Revenue Guidance: Expected to be in the range of $232 million to $237 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Weave Communications Inc (WEAV, Financial) reported strong revenue growth of nearly 19% in Q4 2024, exceeding the high end of their guidance.
- The company achieved its second consecutive quarter of positive operating income, marking full-year profitability for the first time in its history.
- Gross margins improved for the 12th consecutive quarter, reaching 72.6%, indicating enhanced operational efficiency.
- Weave Communications Inc (WEAV) produced $6.1 million in free cash flow in Q4, more than doubling year over year, with a free cash flow margin of 11%.
- The company successfully expanded into specialty medical verticals, with revenue from these areas growing at twice the rate of the overall company revenue in 2024.
Negative Points
- The guidance for 2025 indicates a potential slowdown in growth, with expected revenue growth of 15%, which is lower than the 19% achieved in 2024.
- The company anticipates negative free cash flow in Q1 2025 due to the timing of annual employee bonuses and certain one-time expenses.
- Weave Communications Inc (WEAV) faces increased compliance costs in 2025 due to new regulatory requirements under Section 44B of the Star Bank Act.
- Despite strong growth, the net revenue retention rate decreased to 90% in Q4 2024, down from 95% the previous year.
- The company is making significant investments in new growth areas, which could impact short-term profitability as they establish dedicated teams for these initiatives.
