Inseego Shares Surge After Upgrade From Roth MKM

Roth MKM analyst Scott W. Searle upgraded Inseego Corp. from Neutral to Buy, raising the price forecast from $13 to $15.

Searle highlights the company’s successful balance sheet recapitalization and reducing net debt. The analyst also notes strong growth in core products, up 25%, and emphasizes the experienced management team.

Looking ahead, Searle sees new products, evolving sales channels, and potential acquisitions to boost the company’s outlook for 2025 and 2026.

In the third quarter, the company’s results and fourth-quarter guidance were affected by the sale of its Telematics business, which is now classified as discontinued. This made comparisons tricky, showing only 5% growth, compared to around 25% organic growth, the analyst writes. The sale of Telematics is expected to reduce annual EBITDA by $8-10 million.

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However, core product growth is strong, with hotspots returning to growth (20% in 2024 and 45% in 2H24).

Searle sees new products and better carrier partnerships to drive continued growth in Mobile Solutions (hotspots) through 2025 and 2026, with projected growth rates of 8% and 20%+ respectively.

The analyst noted that the company is expected to drive continued growth through more focused product development and strategic go-to-market approaches.

Searle adds that with an improved balance sheet, inorganic growth opportunities, such as mergers and acquisitions, are also becoming a more viable option.

For FY24, the analyst projects earnings of 2 cents per share, followed by 38 cents per share in FY25 and 70 cents per share in FY26.

Price Action: INSG shares are trading higher by 11.9% to $12.12 at last check Thursday.

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Inseego INSG shares plunged 40.36% to close at $10.83 on Wednesday following disappointing third-quarter 2024 results.

INSG incurred a loss of 7 cents per share in the reported quarter, which lagged the Zacks Consensus Estimate for earnings of 9 cents. INSG had reported a loss of $1.95 in the year-ago quarter.

Total revenues of $54 million increased 30.6% year over year but missed the Zacks Consensus Estimate of $56 million by 4.03%.

Inseego’s stock has skyrocketed 393.6% compared with the Zacks Computer and Technology sector’s rise of 30% in the year-to-date period.

Inseego Price, Consensus and EPS Surprise

Inseego price-consensus-eps-surprise-chart | Inseego Quote

INSG’s Q3 Top-Line Results

Total revenues from continuing operations in the third quarter of 2024 increased 30.6% year over year to $54 million.

This growth was driven by strong carrier mobile hotspot products through MiFi promos and rising SaaS subscriptions from contract renewals.

Product revenues, consisting of Mobile solutions and Fixed wireless access solutions, rose 25% year over year to $42 million.

Services and other revenues were $12 million, increasing 56% year over year from $7.7 million.

INSG plans to discontinue its Telematics business, a move expected to generate $52 million in cash, enhancing the company's liquidity and financial flexibility. The agreement is expected to close in the fourth quarter of 2024.

With increased liquidity from this transaction, Inseego is focused on advancing its 5G pipeline, developing the latest products and driving long-term growth.

As part of this effort, the company recently launched the multi-carrier-certified 5G indoor router, FX3110, as part of the Inseego Ignite channel program and introduced the first MiFi specifically for the Inseego Ignite channel program with all Tier 1 North America operators.

INSG’s Operating Details

Inseego's third-quarter 2024 gross profit was $18.8 million. It reported a gross loss of $2.2 million in the year-ago quarter.

Adjusted EBITDA continuing operations for the third quarter was $6.7 million, reflecting a 12.4% margin. This marks an increase from the adjusted EBITDA of $2 million and a 4.8% margin reported in the year-ago quarter.

Inseego’s Balance Sheet & Cash Flow

As of Sept. 30, 2024, INSG had cash and cash equivalents of $12 million compared with $49 million as of June 30, 2024.

The operating cash flow was $12.1 million in the reported quarter, down from $28.8 million in the previous quarter.

The company has restructured 91% of its outstanding convertible notes, significantly reducing debt and optimizing its capital structure.

INSG’s Q4 Guidance

Inseego expects total revenues from continuing operations between $43 million and $47 million, indicating 25% year-over-year growth at the mid-point.

Adjusted EBITDA from continuing operations is expected between $3 million and $4 million, suggesting more than 50% year-over-year growth at the mid-point.

Zacks Rank & Stocks to Consider

Currently, Inseego has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer & Technology sector are Tuya TUYA, NVIDIA NVDA and NetApp NTAP. Tuya sports a Zacks Rank #1 (Strong Buy), and Palo Alto and NVIDIA each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tuya’s shares have lost 35.7% in the year-to-date period. TUYA is set to report third-quarter 2024 results on Nov. 18.

NVIDIA’s shares have skyrocketed 195.9% year to date. NVDA is set to report third-quarter fiscal 2025 results on Nov. 20.

NetApp’s shares have jumped 35.8% year to date. NTAP is set to report second-quarter fiscal 2025 results on Nov. 21.

Zacks Investment Research

Top Wall Street analysts changed their outlook on these top names. For a complete view of all analyst rating changes, including upgrades and downgrades, please see our analyst ratings page.

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• Evercore ISI Group analyst Thomas Gallagher upgraded Prudential Financial, Inc. from Underperform to In-Line and increased the price target from $117 to $140. Prudential Financial shares closed at $125.26 on Wednesday. See how other analysts view this stock.
• Compass Point analyst Floris Van Dijkum upgraded the rating for BXP, Inc. from Neutral to Buy and raised the price target from $80 to $88. BXP shares closed at $79.39 on Wednesday. See how other analysts view this stock.
• Morgan Stanley analyst Ricky Goldwasser upgraded Doximity, Inc. from Underweight to Equal-Weight and raised the price target from $33 to $53. Doximity shares closed at $52.86 on Wednesday. See how other analysts view this stock.
• Roth MKM analyst Scott Searle upgraded Inseego Corp. from Neutral to Buy and raised the price target from $13 to $15. Inseego shares closed at $10.83 on Wednesday. See how other analysts view this stock.

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