On Wednesday, Roth/MKM maintained a Neutral rating on Digital Turbine (NASDAQ:APPS) but lowered its shares target from $4.50 to $3.00.
The adjustment follows preliminary handset data from IDC indicating that the decline in smartphone shipments from key partner Samsung (KS:005930) has narrowed to just 70 basis points year-over-year, while Xiaomi (OTC:XIACF) has seen a significant growth of 34% year-over-year.
The report suggests that the headwinds Digital Turbine has been facing may be starting to ease, potentially leading to a more optimistic device outlook for the June quarter, provided that monetization and advertising trends continue to be favorable.
While growth is anticipated to return in the December quarter, positive device momentum extending into mid-2024, coupled with sustained monetization trends, could advance this timeline.
The analyst's comments reflect the dynamics of the smartphone market, where partner performance can significantly impact Digital Turbine's business.
The narrowing of Samsung's decline and Xiaomi's growth are seen as positive signs that could translate into improved outcomes for Digital Turbine, especially in terms of device-related revenues.
Digital Turbine's stock performance is closely tied to the broader trends in the smartphone industry, including shipments and the monetization of advertising.
The company's ability to navigate these trends and leverage partner growth is crucial for its financial health and stock valuation.
The updated price target and outlook for Digital Turbine will be watched closely by investors as the company approaches its June quarter, with many looking to see if the positive trends highlighted by IDC's data will indeed materialize into financial growth for the company.
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