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ShotSpotter Downgraded By Imperial Capital After HunchLab Purchase

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ShotSpotter Downgraded By Imperial Capital After HunchLab Purchase

The bullish case for Shotspotter Inc (NASDAQ: SSTI), a manufacturer of gunshot detection technology, announced an acquisition Thursday of HunchLab, prompting Imperial Capital to downgrade the stock.

The Analyst

Imperial Capital's Saliq Khan downgraded ShotSpotter from Outperform to In-Line and lifted the price target from $50 to $54.

The Thesis

ShotSpotter's acquisition of HunchLab technology and related assets from Azavea gives the company an artificial intelligence component in modeling when and where crimes are likely to emerge, Khan said in the downgrade note. (See his track record here.)

The SaaS solution will likely be offered as an add-on to ShotSpotter's existing gunfire detection solution, although it can also be leveraged to win new contracts with municipalities where its core gunshot detection solution isn't being used, the analyst said. 

ShotSpotter said it doesn't expect the acquisition to result in a material impact to 2018 results, Khan said. 

The deal could be seen as a technology purchase, which would require a minimal investment of one or two R&D employees to oversee and improve the platform, he said. 

Finally, the company's acquisition will be financed with existing cash on hand, which justifies a downgrade of the stock from a bullish stance, according to Imperial Capital. 

Price Action

ShotSpotter shares were down more than 9 percent at $48.49 at the time of publication Friday. 

Related Links:

The App That Couldn't Shoot Straight? Some Cops Sour On Recent IPO Shotspotter

American Gun Ownership, By The Numbers

Photo courtesy of ShotSpotter. 

Latest Ratings for SSTI

DateFirmActionFromTo
May 2020JMP SecuritiesMaintainsMarket Outperform
May 2020Craig-HallumDowngradesBuyHold
Feb 2020Imperial CapitalMaintainsOutperform

View More Analyst Ratings for SSTI
View the Latest Analyst Ratings

 

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