B.Riley has launched coverage on Bandwidth Inc. (NASDAQ:BAND) with a Buy recommendation, assigning a price target of $20.00. This implies an upside potential of approximately 45% from the prevailing market price near $13.79. This rating is consistent with the prevailing analyst consensus, which also leans toward a "Buy" recommendation according to InvestingPro data.
The rationale behind B.Riley's positive stance centers on Bandwidth’s strategic advantages in the expanding AI voice market. The company operates a nationwide all-IP network and offers cloud-based communications platform-as-a-service (CPaaS) solutions. Notably, Bandwidth distinguishes itself as the sole major CPaaS provider that owns its network infrastructure, granting it a distinct competitive position especially as AI-driven voice services gain traction.
Bandwidth’s customer portfolio features many of the leading modern digital voice communication providers, and the company benefits from favorable margins and cash flow generation. The valuation target of $20 is based on an enterprise value-to-EBITDA multiple of 8 times for the calendar year 2027 estimated earnings, a multiple B.Riley considers conservative compared to that of similar firms on both absolute and adjusted bases. Bandwidth's current EV/EBITDA ratio stands at 25.32x, and InvestingPro’s Fair Value models imply the stock is undervalued at present.
In its recent financial release for the third quarter of 2025, Bandwidth reported an earnings per share (EPS) of $0.36, just shy of the $0.37 per share anticipated by analysts. Despite this minor shortfall in EPS, the company exceeded revenue expectations with $192 million in sales, surpassing the forecast of $189.91 million. These results suggest resilience in revenue generation amid some earnings challenges. The quarter did not feature any material mergers or acquisition activity. Post-earnings, analyst firms have not updated their ratings or forecasts for Bandwidth. Investors might view the top-line beat as a positive sign even as EPS fell short.
Overall, B.Riley’s initiation signals confidence in Bandwidth’s position within the communication technology sector, specifically the segments tied to AI innovation in voice services. The emphasis on owning network infrastructure coupled with cloud CPaaS offerings provides a platform to benefit from anticipated growth in AI voice applications.