Investing.com -- AutoStore Holdings (OL: AUTO ) was downgraded to “hold” from “buy” at Deutsche Bank following first-quarter results that fell short of expectations.
Analysts cited mounting macroeconomic pressures and a shift in the company’s revenue recognition model as key reasons for the downgrade.
Deutsche Bank also lowered its price target to NOK5.70 from NOK11.40. AutoStore shares last closed at NOK5.055.
The brokerage noted that first-quarter revenues declined 38% year over year to $86 million. Even after adjusting for the impact of the company’s transition to an "AutoStore-as-a-Service" model, revenues would have totaled $113 million, still marking an 18% annual decline.
Under this new model, about $27.5 million of deals, out of $141 million in total order intake for the quarter, will be recognized rateably over the life of the contracts, typically spanning seven to 10 years, rather than upfront.
These projects are expected to go live within one to two quarters from sale.
The shift aims to boost recurring revenues and improve long-term visibility, but in the near term, it intensifies the pressure from an already soft macroeconomic backdrop, Deutsche Bank said. Additionally, the imposition of new U.S. tariffs further compounded the challenges.
Order intake dropped 23% year over year to $141 million and fell 2% sequentially compared with the previous quarter.
The bank warned that while the new service-based model may support revenue stability over time, the immediate outlook remains clouded by reduced upfront revenue recognition and broader market uncertainty.
Deutsche Bank said that without a clearer timeline for stabilization or improvement in the macro environment, near-term upside for AutoStore appears limited.