What Happened?
Shares of 3D measurement and imaging company FARO (NASDAQ: FARO) jumped 17.4% in the morning session after the company reported strong first-quarter 2025 results, which exceeded analysts' expectations across revenue, EPS, and EBITDA and included next quarter's EPS guidance that came in well above consensus. What stood out was the near doubling of adjusted EBITDA and a fourfold increase in adjusted EPS, signaling a meaningful improvement in cost efficiency and product profitability. Zooming out, this quarter featured some important positives.
Is now the time to buy FARO? Access our full analysis report here, it’s free.
What The Market Is Telling Us
FARO’s shares are quite volatile and have had 18 moves greater than 5% over the last year. But moves this big are rare even for FARO and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 18.1% on the news that the company reported a strong Q4 2024 quarter, with revenue, EBITDA, and EPS surpassing Wall Street's estimates. While revenue did decline 5% y/y due to softer demand, the real story here is margin expansion. Gross margins jumped to 56.7% from 50.9% last year, helping drive profitability gains. Adding to the positive momentum, next quarter's EPS guidance came in above analyst expectations, signaling continued strength ahead. Overall, despite some declining growth concerns, strong margins and profitability made this a solid quarter.
FARO is up 18.3% since the beginning of the year, and at $30.81 per share, it is trading close to its 52-week high of $32.48 from February 2025. Investors who bought $1,000 worth of FARO’s shares 5 years ago would now be looking at an investment worth $620.82.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
