Market Overview

'We Are Stepping To The Sidelines': CalAmp Downgraded On Tax Headwinds, Rising Opex

'We Are Stepping To The Sidelines': CalAmp Downgraded On Tax Headwinds, Rising Opex

While CalAmp Corp (NASDAQ: CAMP)’s core business will continue to gain traction, tax headwinds and operating expense increases could act as a short-term overhang, according to Craig-Hallum.

The Analyst

Anthony Stoss of Craig-Hallum downgraded CalAmp from Buy to Hold and lowered the stock’s price target from $26 to $24.

The Thesis

CalAmp's significant spending on R&D initiatives for new and existing programs is likely to continue, cutting into margins, Stoss said in a Thursday note. 

“While we are encouraged by CAMP’s efforts to ultimately grow revenue, the incremental cost of each new revenue dollar seems to have trended unfavorably for the company."

CalAmp is also expected to see a steep increase — potentially more than double — in its effective tax rate in 2019 due to recent U.S. tax changes.

International revenue, which accounted for 25 percent of revenue in 2017, is expected to be taxed more due to changes in the U.S. minimum tax rate on international profits, the analyst said.

CalAmp has likely utilized “most or all” of its international net operating losses to reduce its tax burden, said Stoss.

Despite these short-term concerns, CalAmp should continue to see growth in recurring software revenues and the expansion of key customer relationships, presenting the “right” long-term strategy, the analyst said.

“That said, with multiyear tax headwinds for earnings and our uncertainty of when revenue growth can re-accelerate, we are stepping to the sidelines given the current valuation." 

Price Action

CalAmp shares were down 6.42 percent at $23.17 at the close Thursday.

Related Link:

45 Stocks Moving In Thursday's Mid-Day Session

Latest Ratings for CAMP

Jun 2019UpgradesMarket PerformOutperform
May 2019DowngradesNeutralSell
Mar 2019DowngradesOverweightNeutral

View More Analyst Ratings for CAMP
View the Latest Analyst Ratings

Posted-In: Anthony Stoss Craig-Hallum TelematicsAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


Related Articles (CAMP)

View Comments and Join the Discussion!

Latest Ratings

YEXTMorgan StanleyMaintains15.0
WKMorgan StanleyMaintains42.0
RAMPMorgan StanleyMaintains58.0
PDMorgan StanleyMaintains34.0
HTHTDaiwa CapitalDowngrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

ICYMI: Cigna And Express Scripts, AMD And Nvidia, Amazon And Wayfair

CF Industries Hit With Double Downgrade On Nitrogen Pricing, Long-Term Demand Concerns