On Thursday, Truist Securities adjusted its outlook on Riskified Ltd. (NYSE: NYSE:RSKD), reducing the price target to $7.00 from the previous $8.00, while still endorsing the stock with a Buy rating. The adjustment follows Riskified's second-quarter earnings, which surpassed estimates in revenue, gross margin, and profits.
The company has successfully expanded its customer base and product offerings, particularly with new clients adopting its core Chargeback Guarantee service and other newer products.
Despite these positive developments, Riskified anticipates ongoing economic challenges and a decrease in discretionary spending, which has prompted the company to lower its revenue forecast for the second half of the fiscal year 2024. Nonetheless, Riskified has improved its Adjusted EBITDA guidance and confirmed its fiscal year 2026 target margin range of 15-20%.
Truist Securities believes that Riskified's current valuation and robust balance sheet present it as a compelling deep value investment opportunity. The firm's decision to maintain a Buy rating despite the lowered price target reflects confidence in Riskified's business model and market position. The company's efforts to diversify across various industries and geographic regions have been recognized as a strength, particularly in light of the new client acquisitions and product integration.
In other recent news, Riskified Ltd. has reported an 8% year-over-year revenue increase in the second quarter of 2024, with a 10% revenue increase in the first half of the year, driven in part by the company's go-to-market strategy. This growth was reflected in a 15% increase in gross merchandise volume.
The company also achieved its highest gross profit margin since its IPO, at approximately 54% for the first half of the year. However, due to anticipated macroeconomic challenges, the company has revised its full-year 2024 revenue guidance to $320 million to $325 million.
DA Davidson recently adjusted its outlook on Riskified, reducing the price target to $5 from the previous $7 while maintaining a Neutral rating. This adjustment was prompted by the company's updated guidance, reflecting anticipated macroeconomic challenges. Despite these challenges, Riskified's adjusted EBITDA outlook has been increased.
Additionally, Riskified ended the second quarter with a strong cash position of $422 million and no debt. The company is also investing in research and development to enhance its technology offerings and expand market share.
InvestingPro Insights
As Riskified Ltd. (NYSE: RSKD) continues to navigate the market, current InvestingPro data and insights offer a comprehensive view of its financial health and stock performance. With a market capitalization of approximately $786.14 million and a notable revenue growth of 12.46% in the last twelve months as of Q1 2024, the company demonstrates a capacity for expansion despite economic headwinds. This growth is further emphasized by a 10.89% quarterly revenue increase in Q1 2024, showcasing Riskified's resilience in a challenging environment.
InvestingPro Tips highlight that management's aggressive share buybacks and a balance sheet with more cash than debt are positive signals for investors. Moreover, the company's high shareholder yield and the fact that liquid assets exceed short-term obligations may offer additional reassurance. However, it's important to note that the company has not been profitable over the last twelve months, which is reflected in a negative P/E ratio of -15.63. Despite this, analysts predict Riskified will turn profitable this year, which could be a pivotal moment for the company.
InvestingPro also points out that the stock has seen a significant price drop over the last week, month, and three months, with the current price hovering around 69.22% of its 52-week high. For investors considering the stock's potential for recovery, it may be worth noting that Riskified's fair value is estimated at $5.93 by InvestingPro, slightly below the analyst target of $6.00.
For those interested in deeper analysis, additional InvestingPro Tips are available, offering further insights into Riskified's performance and potential investment opportunities.
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