On Wednesday, UBS began coverage on Veritone (NASDAQ:VERI) stock, a company specializing in programmatic advertising technology, recruiting, and artificial intelligence software. The investment firm assigned a Neutral rating to the stock, accompanied by a price target of $3.50.
The UBS analyst cited a lack of clarity in Veritone's revenue generation capabilities, particularly within its Hiring Solutions segment, as a reason for the Neutral stance. The company's shares are currently trading at approximately 2.5 times UBS's projected 2025 revenue. Despite this valuation, the perceived slow path to profitability has influenced the neutral rating.
UBS's assessment also noted the impact of a recent divestiture by Veritone. Due to this transaction, the firm does not anticipate Veritone to report Non-GAAP Operating Profit until the fourth quarter of 2027. This projection is based on the current market conditions and competitive landscape, which UBS has analyzed through its checks.
The analyst's report acknowledges that their estimates might be too conservative. Improvements in the macroeconomic environment or an underestimation of the competitive threats posed by larger software companies could lead to better-than-expected performance for Veritone.
The price target of $3.50 reflects UBS's current expectations for Veritone's stock performance, considering the factors mentioned. As of now, UBS maintains a cautious outlook on the company's financial prospects in the near term.
In other recent news, Veritone Inc . has reported a series of significant developments. The company has partnered with Court TV to manage and monetize its extensive legal content library, aiming to create new revenue streams. Veritone has also sold its media agency, Veritone One, to Insignia Capital Group for up to $104 million, a strategic move to focus on its core enterprise AI software and services.
Moreover, Veritone has reported a revenue increase of over 10% for the second quarter of 2024, mainly due to strong demand for its AI-based applications. The company has also enhanced its AI-powered digital video forensics tool, Veritone Track, and entered a partnership with Eightfold AI to integrate its job distribution software with Eightfold's talent intelligence platform.
For the third quarter, Veritone anticipates revenue between $34 million to $35 million and a non-GAAP net loss of $2.5 million to $4 million. For the full year, the company projects revenue between $136 million to $142 million, with a non-GAAP net loss estimated between $13 million and $16 million. These recent developments reflect Veritone's commitment to leveraging AI technology across various sectors.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Veritone's financial position and market performance. The company's market capitalization stands at $140.89 million, reflecting its current valuation in the market. Veritone's revenue for the last twelve months as of Q2 2024 was $131.96 million, with a notable gross profit margin of 79.31%, which aligns with one of the InvestingPro Tips highlighting the company's "impressive gross profit margins."
However, investors should be aware that Veritone is "quickly burning through cash" and "not profitable over the last twelve months," as pointed out by InvestingPro Tips. This corroborates UBS's concerns about the company's path to profitability. The operating income margin of -50.72% for the same period further underscores these challenges.
On a more positive note, Veritone has shown strong recent market performance, with a 41.22% price total return over the last three months and a significant 104.42% return year-to-date. This aligns with the InvestingPro Tip noting a "significant return over the last week" and "strong return over the last three months."
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Veritone, providing a deeper understanding of the company's financial health and market position.
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