Source: davit kirakosyan
Lake Street Capital Markets Upgrades Velo3D Price Target
Lake Street Capital Markets, a reputable financial institution, has recently increased its price target on Velo3D (NASDAQ: VELO) from $6 to $18. The entity has maintained a Buy rating for the company, citing long-term structural tailwinds and an improving balance sheet visibility as key factors behind the price revision.
Investors Have Not Missed the Opportunity, says Lake Street
According to the firm, despite the stock’s sharp rebound from earlier lows, it does not believe that investors have missed out on the opportunity. Lake Street’s analysis points to sustained tailwinds including manufacturing reshoring, America-First policy initiatives, rising defense spending, and an increased focus on securing domestic supply chains. The institution believes that these factors create a long growth runway for Velo3D, a company that has made its name in the digital manufacturing sector.
Reshoring and Rising Defense Spending as Growth Drivers
Reshoring, the practice of bringing back off-shored production and manufacturing activities to the home country, has been gaining momentum in the United States. This trend, coupled with the America-First policy initiatives, is seen to drive domestic industrial growth and subsequently, benefit companies like Velo3D that are involved in the production process.
Moreover, the rising defense spending is another positive indicator for the company. The increased budget allocation for defense has led to an uptick in orders for aerospace and defense equipment, which has, in turn, spurred demand for the production capabilities offered by Velo3D.
Velo3D’s New Management and Strategy
The analyst from Lake Street Capital Markets noted that while many institutional investors were familiar with Velo3D by name, fewer had fully appreciated the changes that the new management team has brought about. They also overlooked the revised strategy, or the accelerating momentum in aerospace, defense, and space end markets. The new strategy and management approach have instilled a fresh dynamism in the company, which is now well-positioned to leverage the emerging opportunities in these markets.
Improved Balance Sheet Visibility
Lake Street also highlighted that recent financing activities have alleviated prior balance sheet concerns. This improved financial visibility should support valuation expansion for Velo3D. Even though the firm has adopted more conservative estimates, it believes that the company’s financial health will contribute towards enhancing investor confidence and stimulate further stock price growth.
Upside Potential from Current Valuation Levels
With exposure to reshoring, aerospace and defense spending, along with growth metrics that exceed peer averages, Lake Street sees meaningful upside potential from current valuation levels. The firm’s analysis suggests that Velo3D’s stock is currently undervalued and that the market has yet to fully recognize the company’s growth prospects and financial stability.
In conclusion, Lake Street Capital Markets’ recent price target raise for Velo3D reflects a robust confidence in the company’s future performance. It signals a unique investment opportunity for investors seeking to capitalize on the growth potential of the manufacturing industry, particularly in the aerospace, defense, and space sectors.