On Monday, Roth/MKM adjusted its price target on shares of AMMO, Inc. (NASDAQ:POWW), bringing it down to $1.60 from the previous $2.00, while maintaining a Neutral rating on the stock.
This change follows the company's first fiscal quarter results, which showed sales roughly in line with expectations, although the Gunbroker segment performed below anticipated levels.
The report highlighted that AMMO's core manufacturing profitability continues to be hampered by a cost structure that is deemed too high. Additionally, one-time expenses, including legal and consulting fees, were noted as contributing factors to the "noise" in the profit and loss statement.
Despite these challenges, AMMO's management expressed optimism regarding upcoming improvements in ammunition manufacturing. These improvements are expected to lead to positive gross margins in the second half of the fiscal year.
Moreover, promising metrics in carting and accessories for Gunbroker suggest potential for the marketplace's gross merchandise volume (GMV) to return to positive growth.
Roth/MKM's stance remains Neutral as they await further developments that would indicate a turnaround in profitability for AMMO's ammunition and Gunbroker segments. The revised price target of $1.60 reflects the firm's current outlook on the stock based on these considerations.
In other recent news, AMMO, Inc. reported its fiscal first quarter 2025 results, revealing a decrease in revenue to approximately $31 million despite a challenging industry downturn.
The company, however, remains confident in its long-term stability and profitability, with a focus on higher-margin rifle and pistol production along with eCommerce innovations. AMMO is also gearing up for the launch of its new premium rifle hunting segments and has started fulfilling contractual obligations.
The company's Q1 2025 financials also included an adjusted EBITDA of $2 million and a loss per share of $0.07, impacted by non-recurring expenses totaling $6.3 million, including $3.2 million in litigation contingency. Despite these figures, AMMO maintains a strong financial position with $134 million in current assets and $50.8 million in cash and cash equivalents.
AMMO's strategy includes improvements in product throughput and marginality as manufacturing processes are further streamlined. The company anticipates growth in rifle production in the second and third quarters of 2025.
Despite a decline in sales for GunBroker due to reduced consumer spending, AMMO remains optimistic about its ability to compete in the premium and used market segments. These are among the recent developments that investors should consider.
InvestingPro Insights
InvestingPro data indicates that AMMO, Inc. (NASDAQ:POWW) holds a market capitalization of $178.73 million with a negative P/E ratio of -7.17, reflecting the challenges the company faces in achieving profitability. The company's revenue has seen a decline over the last twelve months by 14.05%, with a quarterly decrease of 10.29%. Despite these figures, the company's gross profit margin remains at 28.87%.
In line with the article's discussion of AMMO's financial performance and Roth/MKM's analysis, two InvestingPro Tips are particularly relevant:
1. AMMO, Inc. is expected to see net income growth this year, suggesting potential for a turnaround in profitability that Roth/MKM and investors are anticipating.
2. The stock is currently trading near its 52-week low, which may present a buying opportunity for investors if the company's management can successfully implement the improvements in ammunition manufacturing and realize the potential growth in its Gunbroker segment.
For readers interested in a deeper analysis, there are 10 additional InvestingPro Tips available, offering insights into the company's financial health and stock performance. Access these additional tips at https://www.investing.com/pro/POWW to make more informed investment decisions.
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