Digital Ally Still A Buy At Chardan, Firm Sees Near 50% Upside

In a report issued Tuesday, Chardan’s Senior Analyst James McIlree reiterated a Buy rating and $20 price target on shares of Digital Ally, Inc. DGLY after the company pre-released its second quarter results.

The second quarter preview stipulates:

• Revenue of $5.5 million, versus the firm’s $5.1 million estimate
• Revenue of $25 million for the year, compared to Chardan’s projection of $24.8 million
• Improved gross margin, driven by increased FirstVu body camera shipments. The analysts believe FirstVu sales will come in somewhere between $1 million and $1.5 million. The note explains that “the company’s supply issues with its FirstVu board supplier is being rectified.” The experts estimate a second quarter gross making of 49 percent, versus the first quarter’s 39 percent. For the full year, they forecast a gross margin of 55 percent. “FirstVu, when its supply issues are resolved, should have higher than average gross margin, and will drive much of the gross margin improvement we are forecasting,” they expound.
• The removal of the previous operating income guidance of $2.5 million, which was now reset to “more realistic levels,” the report states. Skeptical of the prior guidance, Chardan models operating income $164,000 for the full year. “There might be some disappointment on the operating income guidance, but from our perspective, this is good news that revenue is coming in as or better than expected and operating income guidance has been reset to reflect a more reasonable level,” they assure.