On Monday, KeyBanc has adjusted its outlook on DoubleVerify (NYSE: NYSE:DV), reducing the price target to $39 from the previous $45, while continuing to endorse the stock with an Overweight rating. This adjustment is based on the firm's analysis of the company's financial expectations and market conditions.
DoubleVerify, a software platform for digital media measurement and analytics, is expected to report first-quarter revenue of $138 million, demonstrating a year-over-year growth of 13%, which aligns with the consensus. The anticipated EBITDA for the same quarter is projected to be $35 million, also meeting the consensus expectations.
Looking forward to the second quarter, DoubleVerify is guided to achieve revenue of $158 million, indicating an 18% increase year-over-year, which is consistent with the consensus forecast. However, the EBITDA guidance for the second quarter is set at $42 million, slightly below the street's expectation of $44 million. KeyBanc attributes this conservative estimate to a projection that results will be more heavily weighted towards the second half of the year 2024.
The rationale behind the reduced price target to $39 is a result of applying a lower multiple of 25.0x to the 2025 estimated enterprise value to EBITDA ratio. KeyBanc justifies this decision by pointing to increased uncertainty concerning the acceleration of financial results in the latter half of 2024. Despite this, the firm's EBITDA estimates for DoubleVerify remain unchanged.
InvestingPro Insights
As investors consider KeyBanc's adjusted outlook on DoubleVerify, it's crucial to assess the company's financial health and market valuation. DoubleVerify holds a market capitalization of $5.28 billion and is trading at a high earnings multiple with a P/E ratio of 71.81. This is slightly above the adjusted P/E ratio for the last twelve months as of Q4 2023, which stands at 73.69. Such a high P/E ratio often indicates that investors expect higher earnings growth in the future.
InvestingPro Tips highlight DoubleVerify's strong financial position, noting that the company holds more cash than debt on its balance sheet and has impressive gross profit margins of 81.38% for the last twelve months as of Q4 2023. Moreover, the company's cash flows can sufficiently cover interest payments, and its liquid assets exceed short-term obligations. These are vital indicators of a company's ability to sustain and finance its operations without the immediate need for external funding.
Despite a price drop of 26.91% over the last three months, analysts predict DoubleVerify will be profitable this year, with a reported operating income of $86.99 million for the last twelve months as of Q4 2023. For investors seeking more in-depth analysis, InvestingPro offers additional tips to help navigate these metrics and make informed decisions. Explore these insights and receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription with the coupon code PRONEWS24.
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