Digital Ally Still Worth $20/Share After Registered Direct Offering, Roth Capital Says

In a report published Monday, Roth Capital Partners analyst William Gibson maintained a Buy rating on

, with a price target of $20, after the company announced a direct offering of its shares. Digital Ally announced a direct offering of 879,766 shares to two institutions at $13.64 per share. The proceeds of the offering is to be used to fund a pick-up in demand for body cameras and in-car video systems for law enforcement agencies, working capital and retire a short term debt. The loss per share estimate for 2015 has been reduced from ($1.05) to ($0.96), while the EPS estimate for 2016 has been reduced from $0.80 to $0.78, to reflect the higher share count. Digital Ally had reported 2Q15 revenue of $5.5 million, up 55 percent y/y, while maintaining its full-year revenue guidance of $25 million. The company, however, mentioned that it would not be able to achieve its earlier guided operating income of $2.5 million due to an increase in personnel in view of the higher product demand. Analyst William Gibson expects the company to earn $2.4 million in the second half, although this may not be "enough to offset a $6.4 million 1Q15 loss, including $4.3 million of non-cash charges." "Based on its product features, focus, customer service and approximately 6,000 customer relationships, we expect Digital Ally to be one of the body-worn camera leaders," Gibson added.