Barrington Research Downgrades Cantaloupe, Inc. (CTLP) to Underperform

Barrington Research analyst Gary Prestopino downgraded Cantaloupe, Inc. (NASDAQ: CTLP) from Outperform to Underperform.

The analyst comments "We are downgrading our recommendation on Cantaloupe (CTLP) to Hold (from Buy) and removing our price target after the company announced yesterday morning that it had agreed to be acquired by 365 Retail Markets (Private) in an all-cash transaction for $848m, or $11.20 per share. Our downgrade is based on our belief that (1) 365 Retail Markets and CTLP should encounter little pushback from regulators as they seek the requisite regulatory approvals for the deal, and (2) that in spite of the attractiveness of CTLP’s platform, which is focused on providing software and facilitating payments for customers in the unattended retail space, the likelihood of an over-the-top bid for the company from another suitor appears low such that the transaction should be consummated at the agreed-upon deal price. 365’s bid represents an ~18% premium to CTLP’s closing price last Friday. The company noted that the takeout price also represents a 34% premium to its stock’s closing price as of May 30, which was the last trading day before the emergence of media reports regarding a potential takeout of the company. CTLP during yesterday’s trading session rallied in response to the announcement by 15.7% to $10.99. We do not see any reason why 365’s agreement to acquire CTLP would create any qualms among regulators. Antitrust concerns should be off the table, in our view, as the firms have complementary strengths: CTLP’s primary focus is on providing software, telemetry tools, payment processing, and data analytics to operators of vending machines, while 365 offers advanced self-checkout hardware for micro markets and kiosks to customers in the foodservice industry. While CTLP has some overlap with 365 in micro markets – its Three Square Market unit operates in that space – we do not believe the combined entity would raise concerns about excessive concentration given the industry’s significant fragmentation. From a valuation standpoint, we view 365’s bid for CTLP as a tad light – we had a price target of $13 on the company’s shares prior to the deal announcement given our positive assessment of its long-term prospects – but we also acknowledge that the likelihood of a topping bid is low. The deal price implies a multiple of almost 14x consensus FY26E adjusted EBITDA, a valuation that is arguably reasonable given CTLP’s top- and bottom-line growth rates: the company in 3Q25 (the quarter ended March 31) posted yoy growth in revenue and adjusted EBITDA of 11.1% and 36.6%, respectively."

For an analyst ratings summary and ratings history on Cantaloupe, Inc. click here. For more ratings news on Cantaloupe, Inc. click here.

Shares of Cantaloupe, Inc. closed at $9.50 yesterday.

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