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Virtra's Strategic Initiatives Position it for Growth, Analyst Says

By Don Francis, Editor
May 16, 2024 9:13 AM UTC
Virtra's Strategic Initiatives Position it for Growth, Analyst Says

Lake Street's Jaeson Schmidt raised their price target on Virtra (NASDAQ: VTSI) by 23.1% from $13 to $16 on May 15, 2024. The analyst maintained their Strong Buy rating on the stock.

Schmidt's update followed an assessment of Virtra's Q1 2024 earnings report, which was dated May 14, 2024, and their participation in the earnings call. Despite being "disappointed by the softer results," Schmidt argued that the company's story and growth possibilities remain unchanged. They see the post-earnings selloff as an excellent opportunity to buy Virtra shares because, in the long run, they believe the company can grow its sales by double digits.

Looking at Virtra's Q1 2024 financials, the company reported earnings per share (EPS) of $0.11, missing the consensus estimate of $0.12 and representing a 59.3% decrease compared to Q1 2023's EPS of $0.27. The revenue for the quarter was $8.09 million, falling short of the consensus estimate of $8.56 million and marking a 19% decline from Q1 2023's revenue of $10 million. Furthermore, the EBITDA for the quarter was $1.9 million, showing a 52.5% year-over-year decrease.

During the earnings call, CEO John Givens commented on the Q1 2024 results, stating that despite the dip in revenue, it was another period of strategic execution for Virtra as they continue to build upon the transformative groundwork laid over the past two years. Givens attributed the anticipated revenue fluctuation to the cyclical nature of budget allocations, skewed towards year-end, the impact of the U.S. government's continuing resolution, and the completion of a significant portion of their capital backlog in 2023. He expressed optimism that the integration of new sales strategies and team members, coupled with the advancement of the U.S. government budget resolutions, will catalyze purchasing decisions and influence their financial results as the year progresses.

Givens also highlighted the operational enhancements Virtra has made, including the consolidation into a single state-of-the-art production facility and the implementation of an upgraded ERP system. These improvements have resulted in more efficient production, higher quality outputs, and quicker delivery times, ultimately enhancing customer satisfaction. Additionally, Givens mentioned the Microsoft IVAS contract, which has propelled their research and development efforts in the military market, advancing their technology and aiding in deeper market penetration both domestically and abroad. He emphasized that as their strategic initiatives take root throughout 2024, Virtra is well-positioned to capitalize on the opportunities presented by upcoming technology introductions and a growing content library.

It's worth noting that 100% of the top-rated analysts currently rate VTSI as a Strong Buy or Buy, with no analysts considering it a Hold, and none recommending or strongly recommending selling the stock.

Since Virtra's latest quarterly report on May 14, 2024, the stock price has declined by 29.9%. However, on a year-over-year basis, the stock has shown significant growth, up by 94.4%. During this period, Virtra has outperformed the S&P 500, which has risen by 28.3%.

Lake Street analyst Jaeson Schmidt, who raised their price target on Virtra, is ranked in the top 22% of Wall Street analysts by WallStreetZen. With an average return of 11.4% and a win rate of 45.5%, Schmidt specializes in the Industrials and Healthcare sectors, among others.

VirTra, Inc., headquartered in Chandler, Arizona, provides force training simulators and firearms training simulators for law enforcement, military, educational, and commercial markets worldwide. Their product offerings include various simulator systems such as the V-300, V-180, V-100, and V-ST PRO. They also provide training programs like the Virtual Interactive Coursework Training Academy and the Subscription Training Equipment Partnership. Additionally, VirTra offers software solutions, simulated recoil kits/weapons, and other training devices. The company was founded in 1993 and was previously known as VirTra Systems, Inc. before changing its name in October 2016.

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