Shares of ASX-listed Audinate Group Limited (AU:AD8) fell 6.08% today after the company’s Q1 FY25 trading update revealed headwinds. The company faced multiple challenges, such as shorter lead times, higher industry inventory, slower clearance of raw materials, and lower demand. For the first quarter, Audinate reported an unaudited gross profit of AU$10.6 million ($7.2 million).
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Audinate Group manufactures and sells digital audio-visual (AV) networking solutions in Australia and global markets.
Audinate Faces Hurdles in FY25
The industry-wide hurdles are expected to persist in Q2 FY25. As a result, Audinate’s gross profit run rate in the second quarter of FY25 is expected to be in line with the first quarter. However, the company still expects a moderately stronger second half in FY25.
Overall, Audinate is not expected to meet its gross profit forecast for FY25 due to underperformance in the first half. The company had previously projected its FY25 gross profit to be slightly lower year over year.
Audinate Confident About Long-Term Growth
In the long term, Audinate is optimistic about returning to growth in FY26 as market conditions improve. The company also previously indicated that FY25 will be a transitional year as its manufacturing clients handle their inventory.
Additionally, the company is positive about the growing adoption of Dante technology across various audio and video products. In Q1 FY25, design wins increased by 22% compared to the previous year, indicating a strong pipeline of new Dante products.
Furthermore, the company is expected to see improvement in its earnings in H2 FY25 and beyond, primarily due to the launch of new products.
What Is the Share Price Forecast for Audinate?
According to the consensus among analysts on TipRanks, AD8 stock has been assigned a Moderate Buy rating. This is based on five Buy and two Hold recommendations. The Audinate Group share price target is AU$10.74, which is 20.11% above the current level. Year-to-date, AD8 stock has lost 45% in trading.
