AIOT Stock Forecast & Price Target

PowerFleet Inc. demonstrated strong financial performance, reflected in a consolidated gross margin increase of 168 basis points year-over-year to 54.25%, driven by significant growth in service margins, which rose to 60.2%. The gross profit surged by 58.8% to $55.5 million, underscoring the company's successful transition to higher-margin recurring services, which now account for 80% of total revenue, up from 74% in the prior year. Additionally, the company's adjusted EBITDA of $21.6 million, which increased by 58% year-over-year, highlights the effectiveness of its SaaS offerings and operational efficiency improvements.

PowerFleet's financial outlook is marred by its lowered adjusted EBITDA growth guidance, which now suggests a range of $97.3-104.0 million for FY/27, down from the previous estimate of $103-110 million. The company’s net debt has increased slightly to $232 million, while the net leverage ratio remains elevated at 2.97x, highlighting ongoing concerns regarding its debt management despite an expected decline to less than 2.25x by FY/26. Additionally, the challenges faced by clients like EverDriven in harnessing data effectively underscore potential demand-side limitations for PowerFleet's IoT solutions, indicating a struggle to fully capture market opportunities and translate operational efficiencies into significant financial gains.