On Wednesday, DA Davidson adjusted its outlook on Riskified Ltd. (NYSE: NYSE:RSKD), reducing the price target to $5 from the previous $7 while keeping a Neutral rating on the stock. The adjustment follows the company's latest quarterly results, which surpassed expectations with a top and bottom line beat. This performance was attributed to the successful implementation of Riskified's go-to-market (GTM) strategy and the acquisition of new clients, despite some industry-specific challenges.
The downward revision in the price target was prompted by Riskified's updated guidance, which now reflects greater macroeconomic challenges anticipated in the second half of 2024. Consequently, the company has trimmed its revenue forecast by 2% at the midpoint. Despite this, Riskified has increased its adjusted EBITDA outlook.
DA Davidson's decision to maintain a Neutral rating comes amid concerns over reduced visibility for Riskified's revenue in the medium term. The new $5 price target is based on 1.5 times the firm's revised 2025 revenue projection. This recalibration takes into account the potential impact of the broader economic environment on the company's future performance.
Riskified's recent earnings report indicated that the company is still achieving growth and operational success through its strategic initiatives and client growth. However, the anticipation of macroeconomic headwinds affecting the latter half of the year has led to a more cautious revenue expectation.
In other recent news, Riskified Ltd. reported an 8% year-over-year revenue increase in the second quarter of 2024, along with a 10% revenue increase in the first half of the year. This growth was driven by the company's go-to-market strategy and was reflected in a 15% increase in gross merchandise volume. Additionally, Riskified achieved its highest gross profit margin since its IPO, at approximately 54% for the first half of the year.
The company's adjusted EBITDA was positive at $2.3 million in Q2, and it ended the quarter with a strong cash position of $422 million and no debt. However, Riskified anticipates a softer performance in the second half of 2024 due to consumer spending trends in specific sectors. The company also updated its full-year 2024 revenue guidance to $320 million to $325 million.
InvestingPro Insights
As Riskified Ltd. (NYSE: RSKD) navigates the market with a revised outlook, recent data and insights from InvestingPro provide a deeper look into the company's financial health and stock performance. With a market capitalization of $794.69 million and a notable revenue growth of 12.46% over the last twelve months as of Q1 2024, Riskified shows resilience in expanding its business. The company’s gross profit margin stands strong at 52.1%, indicating a robust ability to control costs relative to revenue.
InvestingPro Tips highlight Riskified’s strategic financial management, with the company holding more cash than debt on its balance sheet and liquid assets surpassing short-term obligations. This positions Riskified favorably in terms of liquidity and financial stability. Moreover, while the company was not profitable over the last twelve months, analysts predict profitability within this year, signaling potential for an upward trajectory in earnings.
In terms of stock performance, Riskified has experienced a large price uptick of 27.35% year-to-date, reflecting investor confidence. However, with a current P/E ratio of -15.63 and an adjusted P/E ratio of -19.72 for the last twelve months as of Q1 2024, the market is pricing the stock with expectations of future growth rather than current earnings. It’s worth noting that Riskified does not pay dividends, which may influence investment decisions for income-focused shareholders.
For investors seeking further insights, InvestingPro features additional tips on Riskified, which can be accessed at https://www.investing.com/pro/RSKD. These tips offer a comprehensive understanding of the company's financial nuances and investment potential.
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