Lantronix stock is a buy, Roth says

Lantronix (Lantronix Stock Quote, Chart, News, Analysts, Financials NASDAQ:LTRX) is, unfairly, trading at a discount and that presents a great buying opportunity, says Roth MKM analyst Scott W. Searle.

In a research update to clients January 15, Searle maintained his “Buy” rating and price target of $12.00 on LTRX, implying a return of 93.2 per cent at the time of publication.

The analyst says certain issues are plaguing the stock that simply shouldn’t be.

“Despite a transformative contract ($40M phase 1 with Enel, to drive ~30% growth in FY24), LTRX has traded at a discount multiple (~8x CY24 EPS),” he wrote.”Why? Investor concerns surrounding 1) a recurring pushout of the Enel/Gridspertise launch and 2) the ongoing CEO transition. We believe that both of the issues are trending positively for Lantronix with 1) Enel shipments commencing in the December quarter and 2) the appointment of Saleel Asware as CEO. Use the current weakness as an entry point.

Searle thinks LTRX will post EPS of $0.58 on revenue of $174.0-million in fiscal 2024.

“With Enel on track and the right CEO appointed, investors’ concerns should dramatically thin, in our opinion,” the analyst concluded. “Consequently, with ~30% growth in FY24, we do not expect the LTRX discounted multiple to persist (1.2x EV/C Y24 Sales and ~8x CY24 EPS). We maintain our Buy rating and see upside to $12 or 16x CY24 EPS.”