PowerFleet is a buy, Roth says

Following a sizeable acquisition, Roth MKM analyst Scott W. Searle has reiterated his “Buy” rating on PowerFleet (PowerFleet Stock Quote, Chart, News, Analysts, Financials NASDAQ:AIOT).

On September 18, AIOT announced that it planned to acquire AIoT company Fleet Complete for $200-million.

“The agreement to acquire Fleet Complete is a transformative milestone for Powerfleet and is expected to significantly enhance our revenue quality and bolster our EBITDA by increasing our scale and operating presence across North America and Europe. It will also extend significantly our go-to-market reach through established channel partnerships with some of the world’s largest telecommunications providers,” CEO Steve Towe said. “Additionally, it will support the strength of our revenue streams by integrating Fleet Complete’s high-velocity mid-market business with our enterprise base; and expand the reach of our unique Unity data highway and innovative in-warehouse solutions across the Fleet Complete established subscriber base, creating powerful cross- and up-sell opportunities with existing customers and a compelling value proposition for new customers.”

The analyst says this accretive acquisition adds scale and diversity to Powerfleet.

“With Fleet Complete (FC), Powerfleet has announced its second transformative transaction in the past twelve months (Mix Telematics 10/10/23). FC adds significant scale, product and geographic diversity, and key partner relationships. Overall, this positions Powerfleet as a Tier 1 player for AIoT SaaS solutions,” he wrote.

In a research update to clients September 19, Searle maintained his “buy” rating on PowerFleet, but raised his price target from $11.00 to $13.00.

The analyst thinks the company will post EBITDA of $58.8-million on revenue of $300.8-million in fiscal 2025. He expect those numbers will improve to EBITDA of $91.6-million on a topline of $328.7-million in fiscal 2026.

“With increased scale, product/customer diversity and expanding partner channel (carriers), Powerfleet can now entertain larger global enterprise opportunities. With this step, AIOT moves from consolidation (large deals are done) to growth,” Searle added.