On Thursday, Zeta Global Holdings Corp (NYSE: ZETA) experienced a shift in its stock rating as KeyBanc Capital Markets adjusted its stance on the company. The firm downgraded Zeta Global from Overweight to Sector Weight, marking a notable change in their perspective on the company's stock.
The decision to downgrade comes after a recent initiation of an Overweight rating by KeyBanc. However, the firm has now chosen to remove its December 2025 price target for Zeta Global. In their statement, the analyst expressed a change in confidence, noting that this move was not anticipated so soon after their initial rating but deemed necessary due to current market dynamics.
KeyBanc's analyst cited several reasons for the downgrade, including challenges in the short term that have become increasingly apparent. These challenges have led to a reaction in the share price, which now seems to be more influenced by these short-term issues rather than the company's fundamentals.
Despite the downgrade, KeyBanc acknowledged the ongoing fundamental strengths of Zeta Global. The firm recognized the company's growth narrative, which includes expanding scaled customer spending on its extended platform, systematically adding sales capacity and potential for margin expansion.
In conclusion, KeyBanc has adjusted its recommendation for Zeta Global to Sector Weight, indicating a neutral stance on the stock. This revision reflects the firm's current view that until there is more clarity on the company's performance and market conditions, the stock is likely to be driven by factors other than its fundamental story.
In other recent news, Zeta Global Holdings Corp has demonstrated significant growth with a 42% year-over-year increase in Q3 2024 revenue to $268 million and a 59% rise in adjusted EBITDA to $54 million. This strong performance prompted an upward revision of its full-year 2024 revenue outlook to $986 million, indicating a 35% growth from the previous year.
Analyst firms such as Craig-Hallum, Truist Securities, Oppenheimer, and Needham have recognized this growth, with each firm adjusting their price targets for Zeta Global.
Craig-Hallum raised its price target for Zeta Global, highlighting the company's AI and sales force expansion.
Truist Securities increased its price target for Zeta Global following strong Q3 results, while Oppenheimer maintained an Outperform rating on Zeta shares, projecting steady 20% organic growth.
Needham also increased its price target for Zeta Global following a robust Q3 performance. The company's growth has been attributed to strategic acquisitions, key contracts, partnerships, and an increased focus on AI-driven marketing solutions.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Zeta Global's current position, offering context to KeyBanc's downgrade. Despite the recent stock price volatility, Zeta's financials show some positive trends. The company's revenue growth is robust, with a 41.97% increase in the most recent quarter, and a 29.97% growth over the last twelve months, reaching $901.4 million. This aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year.
However, profitability remains a challenge. Zeta is not profitable over the last twelve months, with an adjusted operating income of -$102.11 million. Yet, an InvestingPro Tip suggests that analysts predict the company will be profitable this year, indicating potential for improvement.
The stock's recent performance has been mixed. While it has seen a significant 107.96% return over the past year, it has experienced a sharp 48.13% decline in the past week. This volatility is reflected in the InvestingPro Tip noting that the stock generally trades with high price volatility.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for Zeta Global, providing a deeper understanding of the company's financial health and market position.
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