On Wednesday, TD Cowen maintained a positive stance on Opera (NASDAQ: NASDAQ:OPRA) shares, increasing the stock's price target from $25.00 to $28.00 while keeping a Buy rating. The firm's analyst highlighted Opera's performance, which surpassed the high expectations set by Wall Street.
The company's revenue growth has shown a notable acceleration, climbing from 17% year-over-year in the second quarter of 2024 to 20% in the third quarter, and is expected to reach 21% for the fourth quarter of 2024, based on the midpoint of the guidance.
Opera's profitability has improved even as the company continues to invest in its browser upgrades, a move that is expected to contribute to its growth trajectory for the fiscal year 2025 and beyond. The decision to raise the price target to $28.00 is based on a 17.5 times multiple of the estimated free cash flow for the fiscal year 2025.
The analyst's comments were grounded in the company's recent financial results and guidance. Opera's strong follow-through in fourth-quarter guidance and a favorable outlook for the upcoming fiscal year were key factors in the analyst's assessment. The company's strategic investments appear to be paying off, as they have not only supported recent browser upgrades but have also set the stage for sustained growth.
Opera's stock price adjustment reflects the firm's confidence in the company's future performance. With the raised price target and maintained Buy rating, TD Cowen signals its belief that Opera is well-positioned in the market and its financial health is on a solid upward trend.
Investors and market watchers will likely keep a close eye on Opera's progress as it moves into the fiscal year 2025, with particular attention to the company's ability to maintain its growth momentum and capitalize on its recent investments.
In other recent news, Opera Limited has been the subject of several analyst reports. B.Riley raised its price target for the company to $25, following strong third-quarter earnings that exceeded expectations, particularly in terms of revenue growth. This growth was largely attributed to the company's E-commerce segment and GX platform.
Analysts from Citi, and Goldman Sachs have also maintained a Buy rating on Opera shares, citing the company's strong e-commerce performance and the integration of AI efficiencies.
Opera's second quarter of 2024 saw a 17% year-over-year increase in total revenue to $109.7 million, and a 30% growth in adjusted EBITDA to $26.6 million. The company's management attributes this positive financial outlook to the robust performance of its e-commerce vertical and expects to benefit from a typically strong fourth quarter.
Furthermore, Opera has made significant strides in artificial intelligence, making its integrated AI, Aria, accessible to all users without the need for logging in. This development is part of Opera's broader strategy to enhance its browser AI capabilities.
Opera has also launched its AI-powered browser, Opera One, for iOS devices, and announced plans to integrate on-device AI capabilities into its Opera One and Opera GX browsers. These recent developments are expected to contribute to sustained revenue and profit growth in the near to medium term.
InvestingPro Insights
Opera's recent performance aligns with TD Cowen's positive outlook, as evidenced by several key metrics from InvestingPro. The company's revenue growth of 17.76% over the last twelve months as of Q2 2024 supports the analyst's observation of accelerating growth. Additionally, Opera's strong profitability is reflected in its impressive EBITDA growth of 32.85% over the same period.
InvestingPro Tips highlight Opera's financial strength, noting that the company "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." These factors contribute to the company's ability to invest in browser upgrades while maintaining profitability, as mentioned in the article.
The market's positive reaction to Opera's performance is evident in the "significant return over the last week" and the fact that the stock is "trading near 52-week high." These InvestingPro Tips align with the article's discussion of Opera's strong follow-through and favorable outlook.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for Opera, providing a deeper understanding of the company's financial position and market performance.
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