Roth/MKM Cuts SoundThinking Stock Target After Chicago Contract Loss
Roth/MKM Alters Outlook on SoundThinking
On Wednesday, Roth/MKM adjusted its view on SoundThinking (NASDAQ:SSTI), a tech company that specializes in software and security services. The firm reduced the price target to $30 from the previous $50 while maintaining a Buy rating on the stock.
Effect of Chicago Contract Loss
This revision follows Chicago’s decision, announced on Tuesday, not to renew its expiring contract with SoundThinking, set to lapse on February 16. The city plans to decommission the service later in the year, on September 22. The contract was significant for SoundThinking, contributing about $8 million annually to the company’s revenue.
Optimism Amidst Setback
Despite this setback, Roth/MKM remains optimistic due to the company’s broader growth trajectory. SoundThinking is poised to expand its service coverage by over 140 square miles in 2023, indicating increasing demand beyond the Chicago market.
New Product Offerings
SoundThinking’s introduction of new software and security screening products is expected to gain traction in the market. Coupled with “strength outside of Chicago accelerating,” according to Roth/MKM, there is potential for the company’s continued growth despite the loss of the Chicago contract.
Valuation and Investment Potential
Roth/MKM notes that SoundThinking’s valuation has already experienced a significant pullback, implying that the current market price may not fully reflect the company’s growth prospects and the value of its upcoming product offerings. The lowered price target to $30 reflects a recalibration in light of the contract loss while still endorsing the stock’s investment potential.
Roth/MKM’s Positive Outlook
In summary, despite the contract setback with the city of Chicago, Roth/MKM reaffirms its positive outlook on SoundThinking’s future. The revised price target aims to account for the immediate financial impact of losing one of the company’s largest customers while considering the broader context of SoundThinking’s market position and product development initiatives.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
