On Wednesday, H.C. Wainwright adjusted its outlook on shares of Versus Systems Inc. (NASDAQ:VS), reducing the price target to $2.00 from the previous $3.00, while retaining a Neutral rating on the stock.
According to InvestingPro data, the stock has shown significant volatility, with a beta of 1.85 and a 37% decline year-to-date. The firm revised its model following the 3Q24 financial report filed last month, which did not include a business update call from management.
Versus Systems reported a 3Q24 revenue of just $3,848, marking a decrease from the second quarter of 2024 as well as a decline from the same period in the previous year. InvestingPro analysis reveals a stark 79.87% revenue decline over the last twelve months, with analysts anticipating further sales challenges ahead.
The company is currently working with five customers, but only had one active customer during the third quarter. The analyst suggested that the revenue decline in 3Q24 might be seasonal and expects an improvement starting in the fourth quarter of 2024.
A new licensing agreement announced in October, along with management changes, have been highlighted as potential positive developments for Versus Systems as the company transitions into 2025. Moreover, 3Q24 results revealed a significant reduction in operating costs, with selling, general, and administrative expenses (SG&A) decreasing to $0.5 million from $1.4 million in 2Q24.
The analyst expressed caution regarding the company's balance sheet, which may deter potential investors. Despite acknowledging the intrinsic value of Versus Systems' technology, the firm awaits greater clarity on the company's near-term revenue potential before adopting a more positive stance on the stock. The revised price target of $2.00 reflects the current trading levels and maintains a neutral stance on the company's shares.
In other recent news, Versus Systems Inc. has undergone significant developments. The company reported a substantial decrease in its first-quarter 2024 revenue and a drop in the number of customers served. Versus Systems has also recently welcomed Aric Spitulnik to its board of directors, who will chair the audit committee and serve on other committees. This move is part of the company's ongoing efforts to enhance its governance structure.
Further, Versus Systems has made strides towards regaining full compliance with Nasdaq listing rules following recent corporate governance adjustments. The company plans to appoint a new independent director to the Board and Audit Committee and propose adjustments to its bylaws at the upcoming annual shareholders' meeting.
In a strategic move, Versus Systems secured a licensing agreement with Aspis Cyber Technologies. Aspis will utilize Versus' gamification, engagement, and QR code technology for a monthly fee of $165,000 starting in 2025. Aspis will also invest $2.5 million in Versus Systems via a convertible promissory note, potentially leading to Aspis owning an estimated 45.8% of Versus' outstanding common stock.
These are the recent developments that investors should be aware of.
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