Mizuho has begun coverage of Napco Security Technologies (NSSC, Financial), assigning an Outperform rating and setting a price target of $39. The firm highlights Napco's leadership in the security sector, particularly its comprehensive solutions that include locks, alarm systems, and access control. A standout feature for Napco is its StarLink radio and related services, which contribute to the company's robust profit margins.
The analyst points out that Napco's unique advantages position it well to capitalize on the ongoing shift from traditional copper telephone wires to more advanced technologies. This transition is expected to support Napco's growth and market expansion.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for NAPCO Security Technologies Inc (NSSC, Financial) is $28.30 with a high estimate of $33.00 and a low estimate of $24.50. The average target implies an downside of 6.29% from the current price of $30.20. More detailed estimate data can be found on the NAPCO Security Technologies Inc (NSSC) Forecast page.
Based on the consensus recommendation from 5 brokerage firms, NAPCO Security Technologies Inc's (NSSC, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for NAPCO Security Technologies Inc (NSSC, Financial) in one year is $37.80, suggesting a upside of 25.17% from the current price of $30.2. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the NAPCO Security Technologies Inc (NSSC) Summary page.
NSSC Key Business Developments
Release Date: May 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NAPCO Security Technologies Inc (NSSC, Financial) achieved a 30% adjusted EBITDA margin and maintained a 91% gross margin in service revenues.
- Recurring service revenue increased by 10.6% to $21.6 million, accounting for 49% of total revenue.
- The company remains debt-free with substantial cash reserves, providing flexibility for long-term growth strategies.
- NAPCO's product development pipeline is robust, with new offerings expected to contribute to service revenue growth.
- The company benefits from a favorable cost structure and low tariff exposure due to its manufacturing facility in the Dominican Republic.
Negative Points
- Net sales for the quarter decreased by 10.8% to $44 million compared to the same period last year.
- Equipment sales decreased by 24.8% due to reduced purchases from major distributors.
- Operating income for the quarter decreased by 23.1% to $11.1 million.
- Research and development costs increased by 15.5%, impacting overall expenses.
- Selling, general, and administrative expenses rose by 16.9%, driven by increased legal fees and compensation costs.
