On Friday, Benchmark adjusted its outlook on Getty Images Holdings Inc. (NYSE: GETY), reducing the price target to $6 from the previous $8, while continuing to endorse the stock with a Buy rating. The revision reflects a more conservative estimate influenced by a higher weighted average cost of capital (WACC) and trimmed financial forecasts.
The firm acknowledged the slow uptake of Getty Images' GenAI product, noting that despite strong interest, the learning curve and utility of the product have led to gradual adoption rates. Management remains optimistic about the future contributions of GenAI to the company's paid download volumes, although it anticipates that it will take time to materialize.
Getty Images has opted to keep its data proprietary, not licensing it out as competitors like Shutterstock (NYSE:SSTK) have done. This strategy is seen as a long-term competitive advantage, ensuring the exclusivity of its offerings. Benchmark views this as an underappreciated aspect of Getty Images' market position.
Moreover, the company's partnership with Nvidia (NASDAQ:NVDA) on its GenAI efforts provides a hedge against the slow adoption of the product. This collaboration could allow Getty Images to pivot towards data licensing if needed, potentially attracting new customer segments, such as AI researchers and technology developers.
In summary, while the stock price target has been lowered to $6, the Buy rating stands. Benchmark's perspective indicates confidence in Getty Images' strategic choices and its potential to navigate market challenges by leveraging its unique assets and partnerships.
InvestingPro Insights
In light of Benchmark's revised outlook on Getty Images Holdings Inc. (NYSE: GETY), current real-time data from InvestingPro provides additional context for investors. The company's market capitalization stands at approximately $1.58 billion, suggesting a notable presence in the market. Despite a recent decrease in revenue growth, the last twelve months as of Q4 2023 show Getty Images with a gross profit margin of 72.7%, highlighting the company's ability to maintain a high level of profitability in its operations.
InvestingPro Tips indicate that analysts are expecting Getty Images' net income to grow this year, which aligns with Benchmark's optimistic view on the company's future. However, it's worth noting that two analysts have revised their earnings expectations downwards for the upcoming period.
Moreover, while the company's P/E ratio is high at 80.62, the adjusted P/E ratio for the last twelve months as of Q4 2023 is more modest at 26.59, which could be appealing to investors looking for growth opportunities.
For investors seeking a deeper analysis, InvestingPro offers additional tips on Getty Images, which can be accessed at https://www.investing.com/pro/GETY. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock the full suite of insights that could further inform your investment decisions.
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