This secret AI stock could make you rich!

 October 13th, 2023, written by Crazy Miser

Key points:

Analysis

Bandwitdh is a Communications Platform as a Service (CPaaS) that sells programmable software applications for voice and messaging. They operate in over 60 different countries and work various companies like Google, Microsoft, Zoom, Amazon, Uber, Nasdaq, Arlo, Docusign, and many more. Their Direct enterprise is up 21% y/y and Porgammable service is up 15% y/y. They are guiding 30% annual EBITDA growth while raising full year revenue outlook.

Their diversified market exposure in Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) suggests adaptability and the possibility of significant market growth. A clear revenue strategy that is in line with the expanding AI market is the idea to monetize AI goods, particularly through their Maestro offering. Additionally, the company's continual development and desire to increase its market share in the Global 2000 market are hinted at by its continued growth and aspirations. Bandwidth is a promising option for investors interested in AI-driven potential due to the favorable industry dynamics around AI in cloud-based communication and collaboration solutions.

Finally, debt and rising interest rates has been a worry for many Wall Street analysts, however, that is not the case at Crazy Miser. Debt shouldn't be a worry for Bandwidth. Although interest rates have risen, Bandwidth's rates are locked for their 2026 Convertible Notes and are paid at a rate of 0.25% while 2028 Convertible Notes are paid at a rate of 0.5%. They would only run into trouble if they chose to refinance which would not make sense with their current low rates.

Valuation

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Bandwidth is significantly undervalued compared to their historic trading valuations. However, Bandwidth will need to show that they can continue to consistently expand their revenue and create a pathway to profitability over the next couple years. We estimate Bandwidth to trade at a valuation of 3x P/S which would give it a price target of $40-80 but could be much as high as $135 for extremely bullish investors.

Technical Analysis

Webull.com - Bandwidth Chart Webull Desktop 

Technical analysis may help us predict the direction the stock will take over the next few weeks or months. We believe the stock is currently over-sold and may rise very soon. The RSI is currently sitting at 26.08 which indicates the stock is extremely oversold. The current chart shows a falling wedge which is about to break. Therefore, the stock may rise to the gap between $21-23 which could create a "double bagger" from current prices. However, the stock may have slightly more room sell off but, be on the lookout for upwards momentum.