We live in a digital world with a digital economy, and this means that in the long term, we need to look to the technology sector for strong stock results. In particular, we need to know AI.
AI shares The technology has made its way into many different areas – interactive chatbots, of course, but also autonomous vehicles, robotics, warehousing… even online content writing. There is no doubt that AI is here to stay, and in the long run, it will bring radical changes.
HC Wainwright analyst Scott Buck would certainly agree; He pointed out a pair of stocks with a strong AI correlation that could increase in value by more than 100% in the next year. And all this for less than $5 admission price. Let’s take a closer look.
BigBear.ai Holdings (BBAI)
The first Buck Picks we look at is BigBear.ai, a company that specializes in AI and machine learning and applies both to automate decision-making processes. The company provides data-driven AI decision solutions to enterprise customers in various fields, including Government & Defense; Manufacturing and Warehouse Ops; and health and life sciences. BigBear.ai solutions can be applied to autonomous systems such as geospatial tracking, as well as for cyber security, supply chain and logistics, and professional services.
BigBear.ai was founded in 2008, and went public in a SPAC transaction in December 2021. That transaction, a business alliance with GigCapital4, saw the launch of BBAI’s ticket on the NASDAQ on December 8 of that year. Since then, BBAI shares have fallen from more than $9 per share to less than $2.
In the year On August 8, the company announced its latest quarterly results for 2Q23, which showed revenue of $38.5 million for the quarter. This figure fell more than $854K below expectations, but was up slightly by 2.2% year over year. On the bottom line, BigBear.ai’s earnings posted a net loss of 12 cents per share — 5 cents below forecasts — but a big improvement from the 45-cent loss reported for 2Q22.
In what bodes well for future business, BigBear.ai finished Q2 with a record total of $206 million. This represents a 5% increase from the end of 1Q23.
The company’s strong customer base and significant portfolio recently attracted the attention of Scott Buck, “The company’s AI-powered decision intelligence solutions meet the needs of three primary markets: supply chains and logistics, cyber security and autonomous systems.” With a backlog of over $206.0M, a client base comprised of recognized commercial and government entities, we believe BigBear.ai is a leader in the growing field of AI-driven data analytics. In the year We recommend investors stock up on BBAI shares in 2024 ahead of earnings growth accelerating and a clearer path to profitability.
Consistent with this bullish stance, Buck rates BBAI as a buy, with a $4 price target indicating ~133% upside through one year. (To see Buck’s story, Click here)
Overall, BigBear.ai receives a moderate consensus rating of Buy from Street analysts based on 4 recent analyst reviews, which include 2 Buys and 2 Holds. The stock is priced at $1.72, with an average price target of $4.50, indicating strong one-year upside potential of ~162%. (look out BigBear.ai stock forecast)
AudioEye, Inc. (AEE)
Now let’s turn our attention to AudioEye, a top-rated digital accessibility platform for clients and users, a software company that makes websites compliant with the Americans with Disabilities Act (ADA) and WCAG standards. The AudioEye platform includes a variety of accessibility tools, including alternative text, closed captioning, content organization, keyboard input, subtitles, and alerts. The Company may provide legal protections such as ADA certification.
From a user perspective, AudioEye products are easy to use and touch every aspect of web accessibility. The platform makes it easy to find and resolve issues with sites, navigate the ever-changing landscape of regulatory compliance requirements, and manage and maintain sites’ accessibility enhancements. The platform can do all of this without imposing fundamental changes to site owners’ website architecture or source code.
AudioEye’s digital accessibility platform is powered by proprietary AI, which provides the audio foundation for a highly automated software system. The platform is designed to operate autonomously, providing proactive monitoring, automatic repairs and detailed reporting to the human operator. The end result is industry-leading legal protection; A recent survey on accessibility found that customers using the AudioEye platform were 67% less likely to experience a valid lawsuit.
Turning to the bottom line, we found that AudioEye’s final financial report covering 2Q23 was in line with expectations. Revenue was reported as $7.84 million, a company record, which was 3.5% higher than the year-ago top line — and just $7,330 shy of the forecast. On the bottom line, the company’s EPS came in at a loss of 2 cents per share, as expected.
Scott Buck, in a note to HCC Wainwright, sees this stock as prime for growth. AudioEye notes that it has a strong pipeline of work and is perfectly positioned to take advantage of new accessibility rules from the Department of Justice.
“Pipeline growth is being driven by new product combinations and improved sales efforts, which should open up new enterprise opportunities. Additionally, last week’s rule from the Department of Justice on web accessibility should begin to drive new business to AudioEye over the next several quarters, in our view.” As a result, we expect a meaningful acceleration in earnings from 4Q23 and through 2024. As more meaningful earnings growth returns, we believe investors should begin to recognize the significant operating potential in the business model.
For Bucks, all of this adds up to a Buy rating and a $10 price target that indicates a potential upside of 115% over the coming year.
Overall, this microcap company has slipped under the radar, and only has 2 recent analyst reviews. Both agree, but it’s the stock to buy, which has provided the median buy-side analyst consensus. The shares are trading at $4.64, and their $10 average target indicates a ~115% upside over the next 12 months. (look out AudioEye stock forecast)
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Disclaimer: The opinions expressed in this article are those of the featured analysts only. The content is intended for informational purposes only. It is very important to do your own analysis before making any investment.
