On Friday, UBS analyst Taylor McGinnis adjusted the price target for Amplitude Inc (NASDAQ:AMPL), reducing it to $11.00 from the previous $13.00, while keeping a Neutral rating on the stock. The revision follows Amplitude's first quarter fiscal year 2024 revenue growth, which aligned with the higher end of the company's guidance at 9% year-over-year.
According to the analyst, Amplitude is currently navigating through renewal optimizations and has not yet indicated a significant acceleration in growth. This is reflected by a 1 percentage point drop in Dollar-Based Net Retention (DBNR) to 97%, and the reaffirmation of a 6% year-over-year revenue growth forecast for the calendar year 2024.
Additionally, the company anticipates a trough in Annual Recurring Revenue (ARR) in the third quarter of fiscal year 2024 with mid-single-digit year-over-year growth.
Despite these challenges, Amplitude's recent performance has shown some positive aspects. The company reported that customers are generally maintaining or increasing their spending after initial adjustments, and the addition of ten new logos, each with over $100,000 in ARR, were all new business wins. These are seen as encouraging signs that the long-term potential and narrative for Amplitude remain solid.
Nevertheless, with expectations of a possible growth re-acceleration being a quarter or two away, UBS has decided to maintain its Neutral position on the stock. The new price target of $11 is based on a 3.5 times enterprise value to calendar year 2025 estimated sales multiple.
InvestingPro Insights
Amplitude Inc's (NASDAQ:AMPL) recent financial performance and market metrics offer a mixed picture for investors. The company's market capitalization stands at $1.13 billion, with a negative P/E ratio indicating that the company is not currently profitable. However, the InvestingPro Tips suggest that Amplitude holds more cash than debt on its balance sheet and has liquid assets that exceed its short-term obligations, which could be seen as signs of financial stability.
InvestingPro Data also reveals that Amplitude's revenue growth in the last twelve months as of Q1 2024 was 12.31%, with a gross profit margin of 74.64%, demonstrating the company's ability to generate income relative to its sales. Despite these positive aspects, the stock has experienced a significant price drop over the last three months, with a 34.51% total return decrease. Analysts predict the company will be profitable this year, which, if realized, could potentially change the current market sentiment.
For investors seeking more detailed analysis and additional insights, there are over 6 additional InvestingPro Tips available for Amplitude Inc, which can be accessed at InvestingPro. Readers looking to take advantage of these insights can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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