H.C. Wainwright reduced its target price on AudioEye, Inc. (NASDAQ: AEYE) to $18.00 from $22.00 while leaving its Buy rating intact. The new target implies nearly 90% upside from the companys prevailing share price of $9.46 at the time of the announcement, even as the stock has fallen roughly 34.8% over the last six months.
The analyst action follows AudioEyes preliminary results for the fourth quarter of 2025. The company reported fourth-quarter revenue of $10.5 million, which matched consensus expectations. Management also guided annual recurring revenue - ARR - to a range between $39.9 million and $40.0 million as of December 31, 2025, up from $38.7 million at the end of the third quarter of 2025. Those ARR figures extend a multi-quarter growth trajectory, with year-over-year revenue rising 18.57% over the past twelve months.
AudioEye forecast adjusted EBITDA for Q4 2025 of $2.75 million, translating to a 26.2% adjusted EBITDA margin. H.C. Wainwright attributed the companys record revenue to robust demand in Europe following the implementation of the European Accessibility Act in June, and noted that additional demand catalysts may come from U.S. Department of Justice Title II regulations scheduled to take effect in May 2026.
The research shop projects material expansion in gross margins as ARR scales, expecting gross margins to approach or exceed 80.0% as recurring revenue climbs. The firm also cited anticipated efficiency gains from AI investments and the deliberate removal of lower-margin customers as incremental sources of margin improvement. Current reported gross profit margin stood at 78.61%, supporting management and analyst expectations for further margin leverage.
Those margin dynamics underpin H.C. Wainwrights forward earnings outlook for AudioEye: the firm models annual EPS and adjusted EPS growth of 30.0% to 40.0% per year over the next three years, and analysts continue to expect the company to report profitability during the current year despite recent negative EBITDA of $1.37 million in trailing quarters.
At the same time, H.C. Wainwright lowered its forward enterprise-value-to-revenue multiple applied to AudioEye from 6.0x to 5.0x. The firm explained the multiple compression by expressing concern that revenue growth could decelerate in 2026, a dynamic that may restrain near-term share price appreciation as small-cap investors increasingly prioritize topline expansion over profitability.
Market valuation metrics remain elevated on a book-value basis. The stock is trading at a Price/Book multiple of 20.79, a level that reflects investor expectations for continued growth despite recent declines in the share price.
AudioEye also reiterated its expectation to report a fortieth consecutive quarter of record revenue for Q4 2025. The companys ARR guidance for the quarter - $39.9 million to $40.0 million - represents a sequential increase from the $38.7 million reported at the end of Q3 2025.
However, the companys third-quarter 2025 results contained mixed signals. AudioEye reported earnings per share of $0.19, narrowly above the consensus of $0.18, while revenue for the quarter was $8.9 million versus expectations of $10.49 million. Following those results, another research firm reiterated its Buy rating and maintained a $25.00 price target, noting that the companys third-quarter revenue and EBITDA were broadly in line with analyst expectations and that fourth-quarter guidance remained consistent with prior projections.
Summary
H.C. Wainwright trimmed its AudioEye price target to $18 but left the Buy rating in place after preliminary Q4 2025 results showed revenue in line with expectations and rising ARR. The firm highlighted improving margins and AI-driven efficiency gains as positives, while reducing the valuation multiple because of concern that revenue growth could slow in 2026.
Key points
- Analyst action: Price target cut to $18 from $22 while maintaining a Buy rating; new target implies roughly 90% upside from a $9.46 share price.
- Operational results: Q4 2025 revenue of $10.5 million, ARR guided to $39.9 million - $40.0 million, and adjusted EBITDA of $2.75 million (26.2% margin).
- Sectors affected: small-cap technology, software-as-a-service, and digital accessibility providers are most directly impacted by these developments and valuation dynamics.
Risks and uncertainties
- Revenue momentum risk - H.C. Wainwright lowered its forward EV/Revenue multiple because slower revenue growth in 2026 could limit the stocks near-term upside; this primarily affects market valuations in the small-cap tech sector.
- Regulatory dependency - Part of AudioEyes recent revenue strength was attributed to European regulation and anticipated U.S. DOJ Title II enforcement; changes in regulatory timelines or enforcement could alter demand patterns for accessibility services.
- Profitability variability - Despite analyst expectations of profitability this year, the company has reported negative EBITDA of $1.37 million in recent quarters, indicating execution risk while scaling margins and converting ARR into cash flow.
Investors tracking valuation multiples and regulatory-driven demand for accessibility solutions will likely weigh the companys improving margin profile against the possibility of slower revenue growth in the coming year. The recent analyst adjustments reflect a balance between durable margin upside and shorter-term growth uncertainty.