On Thursday, DA Davidson reiterated its Buy rating and $42.00 price target for Zeta Global (NYSE:ZETA) Holdings Corp (NYSE:ZETA), following a tumultuous day for the company's stock. The reassurance from the firm comes after Zeta's shares plummeted by 37% at market close, with a further 6% decline in after-hours trading, due to a short report released the previous day.
Zeta Global responded to the short report by issuing a press release to address what it claimed were "false statements and misinformation" within the report. Additionally, the company has announced a $100 million share repurchase program, signaling confidence in its stock.
DA Davidson's analyst pointed out the key insights from a recent discussion with Zeta's management. According to the conversation, Zeta Global has compliant processes for collecting exclusive opt-in information. Furthermore, the analyst noted that ArcaMax and Apptness, companies acquired by Zeta, are becoming less significant financially and are diminishing as data sources for the company.
The investment firm's decision to maintain its Buy rating and $42 price target is based on the belief that the company's stock is undervalued. The target price is set at approximately 8 times the projected 2025 revenue for Zeta Global, indicating a long-term positive outlook on the company's financial growth.
In other recent news, Zeta Global Holdings Corp has been making significant strides in its financial performance. The company reported a 42% year-over-year increase in Q3 2024 revenue to $268 million, and a 59% rise in adjusted EBITDA to $54 million. This strong performance led to an upward revision of its full-year 2024 revenue outlook to $986 million, indicating a 35% growth from the previous year. Amid these developments, Zeta Global faced a downgrade from KeyBanc Capital Markets from Overweight to Sector Weight due to short-term market dynamics.
However, Craig-Hallum increased its price target for Zeta Global, highlighting the company's AI and sales force expansion. Truist Securities also raised its price target following strong Q3 results, while Oppenheimer maintained an Outperform rating, projecting steady 20% organic growth. Canaccord Genuity (TSX:CF) adjusted its price target for Zeta Global, reducing it to $24 from the previous $42, while maintaining a Buy rating on the stock.
InvestingPro Insights
Recent InvestingPro data provides additional context to Zeta Global's current situation. Despite the recent stock price volatility, with a 48.13% decline in the past week and a 42.82% drop over the last month, Zeta's year-to-date price total return stands at an impressive 101.36%. This stark contrast highlights the dramatic impact of the short report on investor sentiment.
The company's financials show a mixed picture. While Zeta is not currently profitable, with a negative operating income of $102.11 million in the last twelve months, its revenue growth is strong at 29.97% over the same period. The gross profit margin of 60.26% suggests a solid core business model.
InvestingPro Tips indicate that analysts anticipate sales growth in the current year and that 11 analysts have revised their earnings upwards for the upcoming period. These positive forecasts align with DA Davidson's optimistic outlook and $42 price target. Additionally, Zeta operates with a moderate level of debt and its liquid assets exceed short-term obligations, which could provide some financial stability during this turbulent period.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Zeta Global, providing a deeper understanding of the company's financial health and market position.
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