Inseego shares rise to buy after Roth MKM upgrade, citing balance sheet improvement and product growth

Inseego shares (TOTAL, Financial data) rose in premarket trading Thursday after Roth MKM upgraded the software-as-a-service solutions provider to Buy and raised its price target to $15 from $13.

Key elements for the upgrade identified by Roth MKM analysts were the recent recapitalization of Inseego’s balance sheet, the strong development of key product lines and the track record of the management team.

The company saw the shift of its telematics division to discontinued operations based on Inseego’s fourth-quarter projections and third-quarter results. With hotspot sales returning 20% ​​in 2024 and expected to rise approximately 45% in the second half of the year, core product growth remains robust. Analysts predict an increase of 8% in 2025 and more than 20% in 2026 and predict that new product introductions and stronger connections with carriers will further drive expansion in 2025 and 2026.

After completing its balance sheet recapitalization, Inseego repurchased or redeemed $147 million of its $162 million convertible debt due 2025. Following the $52 million cash sale of its Telematics division, the company expects net debt to decline to approximately $25 million and annual interest payments. be less than $4 million. This is a notable improvement from net debt of $502 million and annual interest expense of $9 million at the start of 2024.

The financial turnaround was highlighted by Roth MKM analysts as the first step in positioning the company for continued expansion.

This article first appeared on GuruFocus.