SoundHound Stock Rating Downgraded to Neutral by Ladenburg: What Investors Need to Know

SoundHound Downgraded to Neutral by Ladenburg

Source: TipRanks

Analyst Downgrade Insights

• Rating Change: Ladenburg has downgraded SoundHound (SOUN) from "Buy" to "Neutral." The price target remains unchanged at $7.
• Solid Q3 Results: SoundHound reported solid third-quarter results, aligning with Ladenburg's expectations.

Recent Company Developments

• Acquisition of Amelia: The analyzer noted that the acquisition of the private company Amelia expands SoundHound's reach into large enterprises and new verticals.
• Strategic Position: The acquisition is expected to scale the business significantly in the AI voice technology sector.

Reasons for Downgrade

• Profitability Concerns: Ladenburg cited concerns over the near-term absorption of losses tied to the acquisition.
• Rapid Share Price Growth: The downgrade is also attributed to the company's rapid appreciation in share price, which may not sustainably reflect its underlying financial performance.

Future Projections

• AI System Potential: The firm continues to recognize voice technology as a vital early application of AI systems.
• Revenue Guidance: The company projects FY24 revenue between $82 million to $85 million, closely mirroring market consensus ($82.57 million).

Conclusion

This downgrade from Ladenburg reflects a cautious stance on SoundHound's near-term profitability amidst significant corporate changes and a rapidly appreciating stock price. Investors should closely monitor the company’s performance post-acquisition for future assessments.