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Shares of CalAmp Corp. (CAMP) opened 6% on Friday after the company reported mixed Q1 results, with lower-than-expected revenue growth due to global components shortages.
CalAmp Corp is a connected intelligence company, helping businesses and people track, monitor, and recover vital assets with real-time visibility and insights.
The company reported adjusted earnings of $0.08 per share, a cent better than analysts’ expectations of $0.07 per share. However, revenues of $79.7 billion lagged the consensus estimate of $80.25 billion. The company reported earnings of $0.09 per share in the prior-year period.
Revenues grew 8% year-over-year, driven by a strong backlog that remains at historically high levels. Software and Subscription Services (S&SS) grew 26% year-over-year to $35 million, driven by robust demand for products and solutions. In Q1, S&SS represented $44% of total revenues, up from 26.2% in the prior year.
In March, CalAmp’s LoJack business in North America was acquired by Spireon and was accounted for as discontinued operations during the quarter. (See CAMP stock chart on TipRanks)
Gross margins grew 120 bps to 40.7% year-over-year but declined 150 bps sequentially due to higher component costs caused by supply-chain challenges.
CalAmp’s CEO Jeff Gardner commented, “Our SaaS business is benefiting from a strong recovery from the prior year low-point, at the onset of the pandemic. There are signs of increased business activity not only in the U.S. but also in our targeted geographies around the world in support of customers’ 3G-to-4G upgrades.
He further added, “We are cautiously managing through the global component shortages that persist in the supply chain and expect revenue growth to accelerate as the situation normalizes.”
Following the quarterly results, Canaccord Genuity analyst Michael Walkley reiterated a Buy rating on CAMP with a price target of $17. This implies 18.7% upside potential.
Walkley noted that the company’s Software and Subscription Services business continues to generate adjusted EBITDA margins above the industry average and is growing at a faster pace than the Telematics Systems Hardware business. Furthermore, he expects CalAmp’s hardware products to benefit from the LTE upgrade cycle, which in turn will boost services revenue opportunities.
Overall, the stock has a Strong Buy consensus rating based on 3 unanimous Buys. The average CalAmp Corp analyst price target of $15.67 implies 19% upside potential from current levels. Shares of CAMP have jumped 86% over the past year.