On Wednesday, Evercore ISI adjusted its price target for Ibotta Inc (NYSE:IBTA) shares, reducing it to $114.00 from the previous $125.00, while keeping an Outperform rating on the stock.
The adjustment follows the company's second-quarter earnings release, which revealed a mix of higher earnings and a lower forecast that led to an 8% decline in the stock's value during after-hours trading.
The price target will be reevaluated due to anticipated weaker advertising revenue, despite expectations that redemption revenue will grow by 20% in the third quarter, aligning with market predictions. The company's recent performance has not altered Evercore ISI's positive long-term stance on Ibotta.
Ibotta's second-quarter earnings showcased a "Beat and Lower" scenario, which indicates that the company surpassed earnings expectations but provided a revenue forecast that fell short of analysts' anticipations. This has been attributed mainly to a softer outlook for advertising revenue, a key component of the company's income stream.
Despite the near-term revenue guidance concerns, Evercore ISI remains optimistic about Ibotta's prospects. The firm highlights a new partnership with Instacart (NASDAQ:CART) as a potential significant driver for third-party growth as the company moves towards the year 2025. This collaboration could provide a boost to Ibotta's business and offset some of the softer advertising revenue projections.
In summary, Evercore ISI has reaffirmed its positive outlook for Ibotta, citing the company's robust redemption revenue growth and strategic partnership initiatives as reasons to maintain an Outperform rating. The firm's long-term thesis on Ibotta remains unchanged, despite the recent adjustment to the company's price target.
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