Agrify (NASDAQ:AGFY), a provider of hardware and software for indoor grow solutions to the cannabis and hemp industry, has witnessed significant selling of its stock. This penny stock has lost over 47% of its value in the past three months.
What’s Hurting Agrify?
Agrify continues to perform well, and management is confident about its growth prospects. Its top-line jumped 460% year-over-year in Q3. Moreover, revenues improved 33% on a quarter-over-over-quarter basis.
Further, new bookings and backlogs remain strong, indicating strong growth ahead. Agrify reported new bookings worth 32.2 million in Q3, while its total backlog rose to $117.5 million from $101.1 million in Q2.
However, increasing losses took a toll on its stock price. Agrify reported an adjusted EBITDA loss of $14.3 million for the nine months ended September 30, 2021. In comparison, adjusted EBITDA loss stood at $5.6 million in the prior-year period.
Management noted that supply-chain disruptions and increased payroll costs impacted its gross margins and adjusted EBITDA. Furthermore, an adverse revenue mix remained a drag.
What’s Ahead in 2022?
Agrify’s management expects its revenue mix to shift toward recurring SaaS and other recurring income as an increased number of its facilities come online in 2H2022. Further, the company expects its costs to decrease as it shifts its production.
Agrify also expects EBITDA margins to improve significantly due to the benefits from the newly acquired extraction division.
Anthony Vendetti of Maxim Group maintains a Buy rating on Agrify stock and sees its current valuation as “compelling.”
Vendetti noted that “AGFY signed its third TTK (Total Turn-Key ) Solution agreement” and “is exploring avenues for expanding the budget of the TTK program via financing partnerships with REITs,” which he expects “could be a significant top-line growth catalyst.”
Wall Street’s Take
Wall Street maintains a bullish view of AGFY stock. It has received 3 Buy recommendations for a Strong Buy consensus rating. Further, Agrify’s stock forecast on TipRanks shows solid upside potential. The average Agrify price target of $34.67 indicates 258.9% upside potential to current levels.
Tip: TipRanks’ Top Penny Stocks Screener highlights Wall Street analysts’ top-rated penny stocks.
Meanwhile, investors have been buying the dip in Agrify stock. TipRanks’ Stock Investors tool shows that about 10.8% of investors holding portfolios on TipRanks have increased their exposure to Agrify stock in the last seven days.
Download the mobile app now, available on iOS and Android
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >