TLDR
- SoundHound AI stock jumped over 5% in pre-market trading following a strong Q3 earnings report that beat analyst expectations
- The company reported Q3 revenue of $42 million, up 68% year-over-year, surpassing the expected $40.5 million
- H.C. Wainwright analyst Scott Buck maintained a Buy rating with a $26 price target, projecting over 80% upside potential
- SoundHound raised its full-year revenue forecast to $165-$180 million, above its previous $160-$178 million estimate
- Management expects revenue to grow by at least 40% by 2026, with improving margins pointing toward profitability
SoundHound AI shares climbed more than 5% in pre-market trading Monday after the voice recognition company delivered third-quarter results that topped Wall Street estimates. The stock had actually dipped last week following the earnings release. But fresh analyst support brought buyers back.
The company posted Q3 revenue of $42 million, marking a 68% increase from the same period last year. Analysts had been expecting $40.5 million.
The adjusted net loss came in at $0.03 per share. That’s an improvement from the $0.04 loss reported in the prior year period.
H.C. Wainwright analyst Scott Buck reaffirmed his Buy rating on the stock Friday. He set a price target of $26, which represents potential upside of over 80% from current levels. That’s the highest target on the Street right now.
Analysts Point to Growth Drivers
Buck credited the earnings beat to recent acquisitions and expanding customer demand. The company is seeing growth across multiple sectors including restaurants, finance, healthcare, insurance, and retail.
Management’s outlook caught Wall Street’s attention too. The company expects revenue growth of at least 40% by 2026. That’s above what most analysts had been forecasting.
SoundHound raised its full-year revenue guidance to a range of $165 million to $180 million. The previous estimate was $160 million to $178 million.
Buck believes the company is approaching profitability. He pointed to improving margins and a clear path to positive EBITDA as reasons for his bullish stance.
Mixed Views from Other Analysts
Piper Sandler analyst James Fish took a more cautious approach. He raised his price target to $15 from $12 but kept a Hold rating on the stock.
Fish noted that a major IoT deal demonstrates growing traction in the APAC region. However, he observed that Q4 organic growth guidance was implicitly lowered.
The company’s Q3 results showed strength despite headwinds in the automotive sector. Recent acquisitions have helped offset weakness in that market.
SoundHound’s voice AI technology serves clients across various industries. The company provides voice recognition and natural language processing solutions.
The stock has been volatile in recent sessions. It dipped last week even after beating earnings estimates. The renewed analyst support appears to have shifted sentiment.
According to TipRanks, SOUN carries a Moderate Buy consensus rating. Three analysts rate it as a Buy while four have Hold ratings. The average price target sits at $17.00, suggesting roughly 20% upside from current levels.
The company’s expansion into finance and healthcare sectors is gaining traction. These new verticals are contributing to the accelerated revenue growth.
SoundHound’s improving profitability metrics caught the attention of multiple analysts. The path to positive EBITDA looks more achievable based on current trends.
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