Overview
B. Riley revised its recommendation on RF Industries Ltd. (NASDAQ:RFIL) from Buy to Neutral, maintaining a $10.25 price target. The broker noted that RFIL's market price of $11.04 exceeds both the firm’s target and InvestingPro’s Fair Value estimate, indicating the shares may be trading above what current fundamentals justify.
Valuation metrics cited
Analyst Josh Nichols said the maintained price target equates to 1.3 times fiscal 2026 enterprise value-to-sales and 15 times enterprise value-to-EBITDA. B. Riley highlighted that the stock’s market strength has pushed multiples notably higher: InvestingPro data shows a trailing EV/EBITDA multiple of 26.41 for RFIL. Shares have climbed 53% since the firm’s Jan. 14, fourth-quarter fiscal 2025 research update, and InvestingPro reports a 111.09% return over the past year and a 91% year-to-date gain.
Fundamental view and growth drivers
B. Riley said it maintains a constructive view on RF Industries’ underlying business. The firm pointed to the company’s ongoing shift from a traditional component supplier to a diversified solutions provider, a transition validated by fiscal fourth-quarter 2025 results. In that quarter, revenue rose 23% year-over-year and the company achieved an 11.5% EBITDA margin. InvestingPro data reports RFIL’s last-twelve-month revenue growth at 24.25% and trailing EBITDA of $5.28 million.
The analyst team sees momentum coming from higher-margin DAC thermal cooling systems and small cell deployments, which support the firm’s positive view on execution. Nevertheless, B. Riley said current valuation levels already incorporate much of the near-term upside and leave limited room for execution missteps.
Estimates and near-term outlook
B. Riley acknowledged its own projections could prove conservative. The firm’s model assumes fiscal 2026 sales growth of 5% year-over-year, compared with a 24% acceleration recorded in fiscal 2025. For fiscal 2026 it assumes an 8.8% EBITDA margin, below the fourth-quarter result of 11.5%.
Recent quarterly results
RF Industries reported fourth-quarter fiscal 2025 results that exceeded market expectations. The company posted earnings per share of $0.20, versus a consensus forecast of $0.08, a beat of 150%. Revenue for the quarter reached $22.7 million, outpacing an anticipated $19.75 million. B. Riley and InvestingPro data recognize these results as evidence of stronger-than-expected operational performance but emphasize that the current market valuation captures much of the positive near-term outlook.
Implications for investors
In keeping the $10.25 target while lowering the rating to Neutral, B. Riley signaled that although the company’s operational trajectory and higher-margin product mix underpin a positive fundamental case, the stock’s premium valuation constrains upside from current levels. Investors assessing RFIL will need to weigh the company’s validated growth and margin performance against a valuation that, per the analyst, limits tolerance for execution risk.