BTIG begins coverage in SmartRent (New York Stock Exchange: DEATH) with a Buy rating and said it expects the home technology solutions provider to achieve sustainable GAAP profitability starting in the second half of this year.
Shares of the Arizona-based company rose 7% in premarket trading. on Friday.
The brokerage also set a $4.50 price target for the company, implying an upside of nearly 57% from its last close of $2.86.
“With only about 1.5% market share of US rental stock and less than 10% penetration of its current customer base, we see several years of ~20% top-line growth ahead for the company,” said analyst Soham Bhonsle, adding that he expects the company's operating cash flow to turn positive in 2H'24.
Bhonsle wrote that he hopes SmartRent will be Adj. Positive EBITDA for the first time in its history in 4Q'23.
BTIG also initiated coverage on other companies in the sector, including AppFolio (APPF) with a Buy rating and CoStar (CSGP) and Matterport (MTTR) with a Neutral rating.
“For companies that were not profitable, fiscal 2023 was a wake-up call to get their profits and losses in order, and today we are feeling a significant shift in the way these companies pursue growth. “We believe this sets the stage for a modest thaw in fiscal 2024, as companies continue to demonstrate their valuation while showing investors a path to profitability,” BTIG said.
The brokerage added that in the coming years it sees potential for more transitions from the private to the public market, which should take PropTech from being on the periphery to being more mainstream.