Buy Rating Affirmed for ShiftPixy Amid Earnings Beat and Strategic Acquisitions

ShiftPixy (PIXY – Research Report), the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Lucas Ward from Ascendiant maintained a Buy rating on the stock and has a $4.00 price target.

Lucas Ward has given his Buy rating due to a combination of factors, including ShiftPixy’s second-quarter earnings surpassing expectations primarily through reduced operating expenses. Despite a year-over-year decline in revenue to $3.8 million, which was consistent with estimates, the company managed to report a smaller loss per share than anticipated. This was partly due to effective cost management, with operating expenses falling to $4.9 million compared to the estimated $5.6 million, signaling proficient internal financial control amidst challenging business conditions. The reduction in operating loss further underpins the rationale behind the rating.
Furthermore, ShiftPixy has embarked on a new strategic direction, utilizing a $100 million line of credit to acquire other companies within the human capital sector, indicating a proactive approach to growth and diversification. This roll-up strategy has already led to the acquisition of a staffing company with significant clientele and worksite employees. Despite concerns over tax liabilities and the potential urgency for additional capital to meet these obligations, Ward’s valuation reflects a balance between the high-risk profile of ShiftPixy and its prospects for growth and turnaround, hence maintaining a Buy recommendation with a revised price target.

Ward covers the Healthcare sector, focusing on stocks such as Cyclo Therapeutics, Vivos Therapeutics, and 60 Degrees Pharmaceuticals, Inc.. According to TipRanks, Ward has an average return of -55.9% and a 4.76% success rate on recommended stocks.

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ShiftPixy (PIXY) Company Description:

ShiftPixy Inc. engages in the provision of staffing services and solutions. It focuses on the restaurant industry located in Southern California. The company was founded by Scott W. Absher and J. Stephen Holmes on June 3, 2015 and is headquartered in Irvine, CA.