On Tuesday, Stephens maintained an Overweight rating on QuinStreet , Inc. (NASDAQ: NASDAQ:QNST) shares and increased the price target to $27.00 from $23.00, following the company's announcement of a new quarterly revenue record. QuinStreet reported a 125% year-over-year increase in revenue and significant margin expansion, with EBITDA margin improving by 650 basis points year-over-year and 170 basis points sequentially.
The company's performance this quarter was so robust that its quarterly EBITDA matched the total EBITDA of the previous fiscal year. The analyst at Stephens highlighted the insurance "super cycle" and noted that QuinStreet's revenue beat by 25%, with the annual guidance midpoint raised approximately 20% above the Street's expectations.
QuinStreet's EBITDA beat estimates by 39%, and its annual guidance midpoint was raised by 38% above the Street's forecasts. The firm's positive outlook is based on the company's direction towards profitability and its ability to leverage its position in the market, particularly within the insurance channel.
The analyst pointed out that QuinStreet is outperforming its competitors in terms of incremental growth and leverage. The new price target of $27 suggests a forward EBITDA multiple of approximately 15x, reflecting confidence in the company's continued financial improvement and market position.
InvestingPro Insights
QuinStreet's impressive performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's revenue growth of 125.32% in the most recent quarter aligns perfectly with the 125% year-over-year increase mentioned in the report. This exceptional growth has contributed to a strong year-to-date price total return of 57.57%, reflecting investor confidence in QuinStreet's business model and market position.
InvestingPro Tips suggest that analysts anticipate sales growth in the current year, which corroborates the positive outlook presented in the article. Additionally, the company is expected to be profitable this year, supporting the analyst's view on QuinStreet's direction towards profitability.
It's worth noting that QuinStreet holds more cash than debt on its balance sheet, indicating financial stability as it navigates this period of rapid growth. This solid financial footing may provide the company with the flexibility to capitalize on the "insurance super cycle" mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for QuinStreet, providing a deeper understanding of the company's financial health and market position.
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