Positive Outlook for Bandwidth: Buy Rating Supported by Growth in Free Cash Flow, EBITDA Margins, and Market Share Expansion

Needham analyst Joshua Reilly maintained a Buy rating on Bandwidth (BAND – Research Report) today and set a price target of $20.00.

Joshua Reilly has given his Buy rating due to a combination of factors that suggest a positive outlook for Bandwidth’s future performance. The company is experiencing growth in its free cash flow and EBITDA margins, which are expected to benefit from a broader trend towards increased use of voice applications in customer service. This trend is likely to enhance the growth of their Enterprise Voice segment, which contributes positively to the company’s margins.
Furthermore, Bandwidth is anticipated to capture more market share from traditional telecommunications companies, thanks to its unique offerings such as the Maestro operating system and a comprehensive global voice network. Despite a conservative update to their guidance reflecting macroeconomic uncertainties, the company has shown strong results in the first quarter of 2025. This, combined with their advancements in voice AI applications, positions them well for continued revenue and EBITDA outperformance throughout the year. The $20 price target is supported by an enterprise value to free cash flow multiple of approximately 9x.