On Tuesday, RBC (TSX:RY) Capital Markets adjusted its outlook on shares of Zeta Global (NYSE:ZETA) Holdings Corp (NYSE:ZETA), a technology company specializing in data-driven marketing. The firm raised its price target to $43.00 from the previous $37.00 while retaining an Outperform rating on the stock.
Zeta Global reported a strong financial quarter, marking its first achievement of the Rule of 60—a metric indicating a company's combined revenue growth rate and profit margin—and a consecutive Rule of 50 quarter when excluding political revenue. This performance led to an increase in the company's FY/24 guidance by $61 million. Notably, $21 million of this increase is attributed to organic non-political sources.
The company's forecast for FY/25 suggests that organic growth, excluding political revenue, is expected to stay above 20%. This projection aligns with management's initial guidance for FY/24, laying a solid foundation for the company's future performance. RBC Capital anticipates that Zeta's financial figures will continue to improve over the course of the year.
The price target hike to $43 is based on the firm's higher estimates for Zeta's financial performance and an expansion in the multiples of its peers. This adjustment reflects confidence in Zeta Global's ability to sustain its growth trajectory and solidify its market position.
In other recent news, Zeta Global has seen significant growth, with its Q3 2024 earnings showing a 42% year-over-year increase in revenue to $268 million and a 59% rise in adjusted EBITDA to $54 million. Barclays (LON:BARC) and DA Davidson have recognized this robust performance, with Barclays raising Zeta's price target to $32 and DA Davidson increasing it to $42. Both firms have maintained their ratings, Equalweight and Buy respectively.
Zeta's growth has been driven by strategic acquisitions, key contracts, partnerships, and an increased focus on AI-driven marketing solutions. This has led the company to raise its full-year 2024 revenue guidance by $8 million to $931 million, representing approximately 28% year-over-year growth.
The company's ARPU expansion and higher-than-anticipated political candidate revenue have also contributed to this upward trend. Further, Zeta's management has expressed confidence in the company's ability to retain more advocacy revenue in FY25, based on its performance in comparison to previous election cycles.
InvestingPro Insights
Zeta Global Holdings Corp's recent performance aligns with several key metrics and insights from InvestingPro. The company's strong financial quarter, as highlighted in the article, is reflected in InvestingPro's data showing a significant revenue growth of 32.61% in Q2 2024. This robust growth supports the company's achievement of the Rule of 60 and 50 mentioned in the report.
InvestingPro Tips indicate that Zeta has seen a "Significant return over the last week" and a "Strong return over the last month," which correlates with the positive outlook and increased price target from RBC Capital Markets. The stock's impressive year-to-date price total return of 316.55% further underscores the market's confidence in Zeta's performance and future prospects.
Additionally, the InvestingPro Tip noting that "Analysts predict the company will be profitable this year" aligns with RBC Capital's expectation of improving financial figures throughout the year. This optimism is further supported by the fact that "3 analysts have revised their earnings upwards for the upcoming period."
For investors seeking more comprehensive analysis, InvestingPro offers 13 additional tips for Zeta Global Holdings Corp, providing a deeper understanding of the company's financial health and market position.
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