On Thursday, BMO Capital Markets adjusted its outlook on DoubleVerify Holdings Inc (NYSE:DV), a software platform for digital media measurement and analytics. The firm's price target on the stock was reduced to $38.00 from the previous $42.00. Despite this change, the analyst maintained an Outperform rating on the company's shares.
DoubleVerify recently reported its first-quarter results for 2024, surpassing the higher end of its revenue and adjusted EBITDA guidance. The company achieved a 15% year-over-year revenue growth, bringing in $140.8 million, against a guidance range of $136 million to $140 million and surpassing the street's expectation of $138.2 million. The EBITDA margin stood at 27.1%, amounting to $38.1 million, which also exceeded the guidance of $33 million to $37 million and the street's forecast of $35.2 million.
The analyst from BMO Capital cited that DoubleVerify's outlook for 2024 is negatively affected by reduced spending from legacy retail and consumer packaged goods (CPG) customers, who are facing unique challenges. Additionally, there is a directional shift in advertising spend towards social media and connected TV (CTV) platforms. These areas are relatively new for DoubleVerify and could potentially benefit The Trade Desk Inc (NASDAQ:TTD), which operates in the same industry.
Despite these challenges, BMO Capital continues to see DoubleVerify in a positive light, as reflected by the maintained Outperform rating. The reduction in the target price to $38 from $42 is attributed to the spending shifts and issues faced by legacy customers.
DoubleVerify's performance in the first quarter indicates robust growth, but the company's forward-looking statements suggest a cautious approach due to the evolving digital advertising landscape.
InvestingPro Insights
DoubleVerify Holdings Inc (NYSE:DV) has shown resilience in its recent quarterly performance, and insights from InvestingPro further inform the investment picture. With a robust gross profit margin of 81.5% in the last twelve months as of Q1 2024, the company's ability to retain a significant portion of its revenue after the cost of goods sold is impressive. This aligns with the InvestingPro Tip that highlights DoubleVerify's impressive gross profit margins.
InvestingPro data also shows that DoubleVerify trades at a high Price/Earnings (P/E) ratio of 49.56, which suggests a high valuation relative to its current earnings. However, this should be considered alongside the fact that the company holds more cash than debt on its balance sheet, providing financial flexibility and stability, as indicated by another InvestingPro Tip. Additionally, the stock is currently trading near its 52-week low, which could be an attractive entry point for investors who believe in the company's fundamentals and long-term growth prospects.
For those interested in a deeper dive into DoubleVerify's metrics and potential investment strategies, InvestingPro offers a wealth of additional tips. Currently, there are 19 more InvestingPro Tips available for DV, which can be accessed by visiting https://www.investing.com/pro/DV. To gain an edge in your investment research, use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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