On Tuesday, DA Davidson showed confidence in Zeta Global (NYSE:ZETA) Holdings Corp (NYSE: ZETA) stock by increasing the company's price target from $39.00 to $42.00, while maintaining a Buy rating. The firm's decision comes in response to Zeta's impressive performance, which exceeded organic growth expectations and demonstrated a robust growth trajectory.
Zeta Global's revenue growth accelerated to 42% year-over-year, marking a 9-point increase quarter-over-quarter. This significant growth was attributed to strong Average Revenue Per User (ARPU) expansion and higher-than-anticipated political candidate revenue.
Even without the political revenue, ARPU growth remained robust in the mid-20% range, driven by the strength of the agency, channel adoption, and the expansion of use cases.
Further bolstering investor confidence, Zeta Global raised its full-year 2024 revenue guidance by $8 million to $931 million, representing approximately 28% year-over-year growth. This upward revision reflects the company's performance that surpassed third-quarter expectations organically.
DA Davidson praised Zeta's emerging Free Cash Flow (FCF) generation capabilities, which contributed to the company achieving Rule-of-60 status for the quarter. This metric indicates that the sum of the company's growth rate and FCF margin has reached or exceeded 60, a benchmark for efficient growth in the tech industry.
The firm's revised price target of $42 is based on an 8x multiple of the company's projected 2025 revenue. DA Davidson's continued Buy rating and the raised target underscore the firm's optimism about Zeta Global's future performance and market position.
In other recent news, Zeta reported a significant boost in its Q3 2024 earnings, leading to an increased full-year revenue outlook. The company's revenue rose by 42% year-over-year to $268 million, while adjusted EBITDA increased by 59% to $54 million.
The enhanced performance was attributed to strategic acquisitions, key contracts, partnerships, and an increased focus on AI-driven marketing solutions.
Consequently, Zeta raised its full-year revenue forecast to $986 million, marking a 35% growth from the previous year, and its adjusted EBITDA guidance to $188.5 million, up 46% year-over-year.
Among recent developments, Zeta secured significant contracts across various sectors, emphasizing the company's competitive edge in AI-driven marketing.
Partnerships with Yahoo and Snowflake (NYSE:SNOW) enhanced audience targeting and data activation capabilities. The company also reported strong customer growth with a scaled customer count of 475 and a 33% increase in ARPU to $557,000.
Looking ahead, Zeta plans to present further growth strategies in its long-term model presentation in February 2024, with a focus on the publisher cloud, connected TV, and mobile as significant revenue drivers. It is important to note that these projections are based on current trends and subject to change.
InvestingPro Insights
Zeta Global Holdings Corp's recent performance aligns with several key metrics and insights from InvestingPro. The company's impressive revenue growth of 32.61% in the most recent quarter, as reported by InvestingPro, supports DA Davidson's observations of accelerated growth. This strong performance is further reflected in Zeta's year-to-date price total return of 316.55%, indicating substantial investor confidence.
InvestingPro Tips highlight that Zeta has seen significant returns over various time frames, including a 26.6% return in the last week and a 345.87% return over the past year. These figures corroborate the positive sentiment expressed in DA Davidson's analysis and the raised price target.
While Zeta is currently trading near its 52-week high, with its price at 96.18% of the peak, InvestingPro cautions that the stock's RSI suggests it may be in overbought territory. This information could be valuable for investors considering entry points or portfolio adjustments.
For those seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Zeta Global Holdings Corp, providing a deeper understanding of the company's financial health and market position.
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