MSAI stock is a buy, Roth says

A new development at MultiSensor AI (MultiSensor AI Stock Quote, Chart, News, Analysts, Financials NASDAQ:MSAI) has Roth MKM analyst Gerry Sweeney fulling bullish about the stock.

On April 18, MSAI announced that it was rebranding its thermal inspection services businesses into a new business called MSAI Inspection Services.

“The launch of MSAI Inspection Services is an important strategic step, as we continue our transition into high-value-add, software enabled services with recurring revenues. Combining MSAI’s strong inspection capabilities and leading-edge software provides a hugely attractive value proposition to our enterprise clients,” said Executive Chairman David Gow.

The analyst summarized the move and why he thinks it matters.

“MSAI recently announced the reorganization of its inspection business,” he wrote. “Growth in this line is likely to be driven by recent changes in mandatory guidelines. The Inspections business is not MSAI’s core cloud based asset management service, however, we believe the segment can provide entry into new companies, where MSAI can potentially expand and upsell its cloud asset management services. We look at this as asset light, high margin, strategic growth investment for the company.”

In a research update to clients April 22, Sweeney maintained his “Buy” rating and price target of $8.00 on MSAI.

The analyst thinks MSAI will post EBITDA of $1.5-million on revenue of $17.2-million in fiscal 2024. He expects those numbers will improve to EBITDA of $6.2-million on a topline of $39.9-million the following year.

“Our $8 price target is based on an EV/sales multiple of 2.7x 2025 sales of $39.9mm,” he concluded. “This compares to Industrial technology comparable companies which trade at 5.6x 2025 projected EV/sales. Events which may impact our estimates and results include the loss in part or whole of its anchor distribution client, failure to obtain additional clients, competition from major, established hardware providers, and ability to raise debt & equity, among other items.”