On Tuesday, KeyBanc maintained its Sector Weight rating on shares of Criteo S.A. (NASDAQ: CRTO), following the company's Retail Media Investor Update. Criteo's leadership did not set formal targets during the event but highlighted the potential within the retail media market. The company outlined a total addressable market (TAM) of $207 billion, with $50 billion represented in the serviceable addressable market (SAM). They also discussed strategies for increasing monetization among existing clients.
Criteo's presentation showcased their ambition to capitalize on the growing retail media sector. However, the company stopped short of providing specific financial targets. Instead, they focused on the broader opportunity, indicating the sizable market they aim to tap into. The emphasis was on the path they intend to take to enhance revenue streams from their current customer base.
Despite the optimistic outlook presented by Criteo's management, KeyBanc expressed reservations about the company's ability to meet the market's expectations for its Retail Media contribution, excluding traffic acquisition costs (ex-TAC), particularly for the years 2025 and 2026. The analyst noted that while there are opportunities for Criteo to succeed, the rapidly evolving competitive landscape poses significant challenges.
KeyBanc's commentary suggests a cautious approach to Criteo's stock, acknowledging the potential in the retail media space but also recognizing the hurdles the company may face. The firm's decision to reiterate a Sector Weight rating indicates a neutral stance, implying that the stock is expected to perform in line with the average returns of the sector.
In other recent news, Criteo has been the subject of several analysts' updates. BMO (TSX:BMO) Capital Markets maintained an Outperform rating on Criteo, emphasizing the company's potential in the Retail Media sector, while adjusting its price target to $48.00. Similarly, DA Davidson sustained its Buy rating but reduced its price target to $53.00, citing a slight decrease in the 2025 CexT estimate due to reduced Iponweb revenues.
These updates followed Criteo's robust Q3 2024 earnings report, which showcased $459 million in revenues and a 9% year-over-year growth in Contribution ex-TAC at constant currency. The company's Retail Media revenue increased by 23%, hitting $61 million, while Performance Media grew by 5%. Moreover, Criteo doubled its brand count to 3,100 and activated media spend to $1.5 billion over the past two years.
In addition to financial developments, Criteo's CEO, Megan Clarken, announced her upcoming retirement. Despite a 16% decline in Criteo's AdTech services due to reliance on one client, the company projects a 10%-11% growth in Contribution ex-TAC for 2024, with an adjusted EBITDA margin projected at 32%-33%. These recent developments highlight Criteo's ongoing growth and potential in the digital advertising space.
InvestingPro Insights
To complement KeyBanc's analysis of Criteo S.A. (NASDAQ: CRTO), recent data from InvestingPro offers additional context for investors. Despite the cautious outlook from analysts, Criteo's financials show some positive indicators. The company's P/E ratio (adjusted) stands at 17.77, suggesting a relatively modest valuation compared to some tech peers. This could be attractive to value-oriented investors, especially considering the company's profitability over the last twelve months.
InvestingPro Tips highlight that Criteo holds more cash than debt on its balance sheet, which provides financial flexibility as the company navigates the competitive retail media landscape. Additionally, management has been aggressively buying back shares, potentially signaling confidence in the company's future prospects.
However, aligning with KeyBanc's reservations, InvestingPro data shows that Criteo's revenue growth in the last twelve months was -0.05%, with a 2.2% decline in the most recent quarter. This underscores the challenges the company faces in growing its top line in a competitive market.
For investors seeking a deeper dive into Criteo's prospects, InvestingPro offers 14 additional tips, providing a comprehensive view of the company's financial health and market position.
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