Analyst Slashes ARC Group PT, But Says 'Time To Buy'

In a report published Wednesday, analysts at Brean Capital maintained their Buy rating on

, while lowering the price target from $25 to $12. The analysts believe that this is the time to buy the company's stock, given the improvement in its EBITDA and revenue trends. The analysts believe that the company's stock could have upside potential of almost 45 percent in 2015 and close to 100 percent in 2016. In addition, "EBITDA margin can improve Q/Q from 14% currently to 18% exiting CY15, and to at least 20% for CY16," the analysts added. ARC Group has pre-announced its March quarter EBITDA in line to marginally better than that reported for the December quarter, at $3.8 million. The company has also announced incremental cost savings to the tune of $3 million to $4 million. The cost savings are expected to come from scrap reduction, as well as reductions in the workforce and corporate overheads, and due to leaner manufacturing operations. "Firearms market should be stabilized although we're taking a prudent view in '15. We believe firearms is now 30% (vs. current 24% GM). While we have no incremental benefit from growth in firearms orders in our forecast, we believe there's some opportunity to see order growth," the analysts stated.