UBS cuts Xometry stock target to $21 on weaker top-line guide

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On Wednesday, UBS has adjusted its stock price target for Xometry Inc (NASDAQ:), a leading on-demand manufacturing marketplace, reducing it to $21.00 from the previous $32.00. The firm has chosen to maintain a Neutral rating on the stock.

The decision comes as a response to Xometry’s recent guidance indicating a weaker top-line performance and a delay in achieving EBITDA breakeven, which is now expected in 2025 rather than 2024.

The revision of the price target reflects concerns regarding the company’s revenue guidance. Xometry’s forecast suggests that marketplace growth will exceed 20% for the year, which is a downturn from previous expectations. This update follows a period where the company’s shares had seen positive movement based on the anticipation of significant buyer growth and revenue stabilization.

Xometry’s guidance has been influenced by a monthly revenue loss from larger orders amounting to $4-$5 million. While February showed a slight improvement over January, the company has based its first-quarter and full-year 2024 guidance on the trends observed to date in the first quarter.

The analyst pointed out that if January’s performance was an outlier or if there is a turnaround in manufacturing, the company’s 2024 guidance might be seen as cautious.

The analyst notes that buyer growth in the first quarter of 2024 is anticipated to be slower than the 36% growth seen in the fourth quarter of 2023. This slowdown makes it difficult for the company to achieve the previously expected top-line growth of 35-40% for the full year.

Despite recognizing the long-term potential of Xometry’s initiatives like Teamspace and Vertex (NASDAQ:) AI, the analyst suggests that the stock is likely to stay within a certain range until there is clearer visibility on improvements in the manufacturing sector.

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