AIOT Stock Forecast & Price Target

PowerFleet Inc. has demonstrated a robust improvement in its financial performance, with consolidated gross margin increasing by 168 basis points year-over-year to 54.25%, fueled by a significant rise in services gross margin. The company's gross profit surged 58.8% to $55.5 million, while total revenue for Q1/26 reached $104.1 million, reflecting a healthy year-over-year growth of 38% largely driven by a 57% increase in services revenue. Additionally, PowerFleet's adjusted EBITDA rose 58% year-over-year to $21.6 million, with the adjusted EBITDA margin improving by 257 basis points, indicating a successful transition towards higher-margin recurring services that now represent 80% of total revenue.

PowerFleet's financial outlook includes a forecasted decline in net debt to adjusted EBITDA ratio, expected to decrease from 3.4x at the end of FY/25 to approximately 1.5x by FY/27, indicating improved leverage but still suggesting ongoing debt management concerns. The company's updated adjusted EBITDA growth guidance has been revised down to a range of $97.3-104.0 million for FY/26, reflecting a weakened operational base compared to the previous guidance of $103-110 million. Furthermore, despite a slight reduction in net leverage from 3.25x to 2.97x over the quarter, the net debt remains high at $232 million, which raises concerns about financial flexibility and risk exposure amid operational challenges.