On Thursday, Canaccord Genuity adjusted its price target for Zeta Global Holdings Corp (NYSE: ZETA), reducing it to $24 from the previous $42, while keeping a Buy rating on the stock. The decision follows a period of significant momentum for the company, with its stock currently considered undervalued based on its earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue multiples.
The firm highlighted that Zeta Global's current challenges are more related to reputation and investor sentiment than to business outcomes. Despite the concerns, Canaccord Genuity expressed confidence in the company's performance, noting that Zeta Global has initiated a $100 million stock buyback program, demonstrating a commitment to its financial strategy.
The analyst from Canaccord Genuity acknowledged that the stock's multiple is likely to remain low in the near future, which has influenced the new price target. The revised target is based on a 4.0x enterprise value to revenue (EV/R) multiple on the company's calendar year 2026 estimates, which suggests a slight increase from the current trading levels on calendar year 2025 estimates.
In the statement, the analyst conveyed a cautious optimism, hoping that Zeta Global's business practices will prove to be sound despite shaken investor confidence. The firm anticipates that restoring investor trust will require time and continued positive business results.
The new price target of $24 factors in an approximate enterprise value to EBITDA (EV/EBITDA) multiple of 25x applied to the firm's calendar year 2025 EBITDA estimate of $244 million, plus an expected net cash position of approximately $253 million, and assumes around 264 million fully diluted shares outstanding. The firm's stance on Zeta Global remains positive, but it also acknowledges an increased risk profile for the investment.
In other recent news, Zeta Global Holdings Corp has been making significant strides in its financial performance. The company reported a 42% year-over-year increase in Q3 2024 revenue to $268 million, and a 59% rise in adjusted EBITDA to $54 million. This strong performance led to an upward revision of its full-year 2024 revenue outlook to $986 million, indicating a 35% growth from the previous year. Amid these developments, Zeta Global faced a downgrade from KeyBanc Capital Markets from Overweight to Sector Weight due to short-term market dynamics.
However, Craig-Hallum increased its price target for Zeta Global, highlighting the company's AI and sales force expansion. Truist Securities also raised its price target following strong Q3 results, while Oppenheimer maintained an Outperform rating, projecting steady 20% organic growth.
InvestingPro Insights
To complement Canaccord Genuity's analysis, recent data from InvestingPro sheds additional light on Zeta Global's financial position and market performance. Despite the reduced price target, Zeta's revenue growth remains strong, with a 41.97% increase in quarterly revenue as of Q3 2024. This aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year.
However, investors should note that Zeta's stock has experienced significant volatility recently. InvestingPro data shows a 48.13% decline in the past week and a 42.82% drop over the last month. This volatility is reflected in the InvestingPro Tip that the stock generally trades with high price volatility and has taken a big hit over the last week.
On a positive note, Zeta's liquid assets exceed its short-term obligations, and it operates with a moderate level of debt, according to InvestingPro Tips. These factors may provide some financial stability as the company works to rebuild investor confidence.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Zeta Global, providing a deeper understanding of the company's financial health and market position.
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