Weave (WEAV) Reports Q4. Sell Mama’s Creations (MAMA). Perpetua (PPTA) on Watch
Shares of Weave (WEAV) are selling off today following yesterday’s Q4 report that beat on both the top and bottom lines.
Revenue grew by 16.5% to $63.1 million, beating by 1.8%, while adjusted EPS of $0.03 improved from -$0.01 last year (thanks to gross margin improvements to 72.6%) and beat by a penny. Free cash flow of $61 million more than doubled. Revenue guidance for $232 - $237 million straddled consensus of $235.7 million.
On the conference call, management talked about all the progress the company has made expanding into specialty medical verticals, strengthening integration partnerships, progress on payments, releasing solutions for multi-location practices and working AI into solutions. Some analysts asked if these new functionalities warranted price increases. Management was noncommittal. But they did say they’re investing to build out teams around each of the major initiatives to better capture growth potential.
Management talked about a tough comparison coming up in Q2 due to price increases that took place last year that could make for a relatively slow quarter on paper. But they also said the company should grow faster this year than last when you remove the impact of price increases.
It’s interesting when you consider that guidance implies around 15% growth in the coming year, and that in both 2023 and 2024, revenue growth was nearly 20% after guidance was for only 11% (2023) and 15% (2024). Point is that management tends to be conservative, then over-deliver.
I am extremely surprised that shares of WEAV are trading down around -18% today. This has become something of a pattern with companies that don’t smash it out of the park. The market is also selling off this afternoon, and we have options expiration, which could be amplifying what may have been an otherwise unremarkable pullback in WEAV stock. Maintaining at hold. HOLD
I’m going to let go of Mama’s Creations (MAMA) today. The stock is beginning to fall apart and it’s not helping that other retail stocks (SFM, WMT) are taking it on the chin. We may well come back to MAMA later, but for now, let’s take a modest loss and move on. SELL
I’m also considering filling our other half of Perpetua Resources (PPTA) on weakness. I’m not ready just yet but wanted to let you know I’m considering it. BUY HALF
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