BofA Securities Upgrades Agora Inc. (API) to Buy

BofA Securities analyst Daley Li upgraded Agora Inc. (NASDAQ: API) from Neutral to Buy with a price target of $6.00 (from $3.10).

The analyst comments: "We upgrade Agora Inc to Buy from Neutral, given 1) potential demand recovery driving positive revenue growth in FY25E; 2) improving profitability with potential GAAP level breakeven in FY25E; and 3) undemanding valuation as the stock trades close to its net cash level (US$3.9 per ADS for FY25E). Besides, we see better RTE demand in customer services, education, IoT and companion scenarios, boosted by GenAI once the cost of OpenAI’s Realtime API becomes more commercially affordable for wider usage, riding on the partnership between Agora and OpenAI. In view of the growing IoT business, we raise our FY24-26E revenue by 2-3%. Rolling over valuation, we raise our PO to US$6.0 (from US$3.1) based on 4x 12mths Fwd est. P/S (previously 2x, due to improving fundamental by potentially reaching breakeven in FY25E), set at a 20% discount to China SaaS peers, given slower revenue CAGR. Next catalyst: lower usage cost of OpenAI’s new Realtime API, which could promote wider client’s adoption."

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

Shares of Agora Inc. closed at $4.00 yesterday.

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