On Thursday, Kornit Digital Ltd . (NASDAQ:KRNT) shares experienced a positive shift in market expectations as Craig-Hallum maintained a Buy rating on the company's stock while increasing the price target to $33.00, up from the previous $27.00. The revision reflects a potential return to revenue growth for Kornit in the fourth quarter, marking a significant turnaround after a period of stagnation.
The analyst from Craig-Hallum noted that for the first time in two and a half years, Kornit is poised to see an uptick in its revenue figures. This anticipated growth is attributed to several factors, including the digestion of industry capacity, a new product cycle, the introduction of a new business model, and signs of recovery in the company's base business. These elements are expected to contribute to a meaningful acceleration in fiscal year 2025 and beyond.
The report further highlighted that Kornit has been implementing a capital allocation strategy that is highly favorable to shareholders. This strategy, which emphasizes share repurchases, is projected to significantly enhance shareholder value in the upcoming years.
Despite the optimistic outlook, the analyst has slightly reduced revenue assumptions for Kornit, citing a conservative approach and the need to account for changes in the business model that may negatively impact the mix.
Nonetheless, the analyst suggests that if Kornit's plans for the next year are successful, there could be considerable upside to the current estimates. This potential for growth has led to the raised price target, signaling confidence in Kornit Digital's future performance.
InvestingPro Insights
Recent data from InvestingPro adds depth to the analyst's optimistic outlook on Kornit Digital Ltd. (NASDAQ:KRNT). The company's market capitalization stands at $1.41 billion, reflecting investor confidence in its growth potential. Despite recent revenue challenges, with a -11.83% decline in the last twelve months as of Q3 2024, InvestingPro Tips suggest that net income is expected to grow this year, aligning with the analyst's prediction of a return to revenue growth.
The company's aggressive share buyback program, highlighted as an InvestingPro Tip, supports the analyst's positive view on Kornit's capital allocation strategy. This approach is likely to boost earnings per share and potentially drive stock price appreciation. Additionally, Kornit's strong balance sheet, with more cash than debt, provides financial flexibility to fund growth initiatives and weather market uncertainties.
Investors should note that Kornit's stock has shown remarkable performance, with a 78.18% return over the past year and trading near its 52-week high. This momentum is consistent with the analyst's upgraded price target and bullish stance. For those seeking a more comprehensive analysis, InvestingPro offers 16 additional tips on Kornit Digital, providing a deeper understanding of the company's financial health and market position.
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