On Monday, Lake Street Capital Markets updated its outlook on PAR Technology (NYSE:PAR), lifting the price target to $48 from the previous $42 while sustaining a Buy rating. The adjustment follows PAR Technology's reported fourth-quarter earnings, which revealed an adjusted EBITDA loss of $4.5 million, falling short of the consensus estimate that anticipated a loss of $3.1 million.
The company, known for its point-of-sale (POS) and back-office software solutions, is currently focusing its efforts on successfully deploying systems for Burger King. This initiative has led to increased operational expenditures, prompting Lake Street to revise its financial model to account for higher costs throughout 2024. The firm predicts that PAR will not experience a positive adjusted EBITDA quarter until 2025.
Despite the setback in the fourth quarter, PAR Technology expressed confidence that its annual recurring revenue (ARR) would grow by 20-30% in 2024. This projection builds on the 23% ARR growth the company achieved in 2023. Lake Street's analysis suggests that PAR's recent business developments, including partnerships with Burger King, Hooters, and Bob Evans, signal potential Tier 1 business wins in 2024, which could drive significant revenue growth in the following years.
The company anticipates that by the time it reports first-quarter earnings in early May, it will have a more detailed understanding of the key factors influencing its revenue and profit. Lake Street's decision to raise the price target on PAR Technology is based on the expectation that the company's strategic moves and growing pipeline will yield long-term growth, despite the current extended timeline to profitability.
InvestingPro Insights
Following Lake Street Capital Markets' recent price target update for PAR Technology (NYSE:PAR), insights from InvestingPro reveal a nuanced financial landscape for the company. With a market capitalization of $1.19 billion, PAR Technology is navigating through a challenging phase, as reflected by an adjusted price-to-earnings (P/E) ratio of -15.32 for the last twelve months as of Q4 2023. This metric underscores the company's current lack of profitability, a fact also highlighted by the InvestingPro Tip that analysts do not expect PAR to be profitable this year.
The company's revenue growth remains a bright spot, with a 16.87% increase over the last twelve months as of Q4 2023. This aligns with PAR Technology's confidence in growing its annual recurring revenue by 20-30% in 2024. Despite the recent shortfall in adjusted EBITDA, PAR's strategic partnerships and focus on expanding its POS solutions could be the driving force behind this optimistic revenue trajectory.
InvestingPro Tips suggest that potential investors should be aware of the stock's volatility and the consensus among analysts that earnings are likely to be revised downwards for the upcoming period. Nonetheless, PAR's liquid assets do exceed short-term obligations, which may provide some financial stability amidst the anticipated costs of deploying systems for major clients like Burger King.
For those considering an investment in PAR Technology, leveraging the comprehensive analysis available on InvestingPro could be beneficial. With additional tips listed on the platform, investors can gain deeper insights into the company's financial health and future prospects. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and uncover more InvestingPro Tips that can help inform your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.