On Thursday, Morgan Stanley (NYSE:MS) adjusted its stance on Zeta Global (NYSE:ZETA) Holdings Corp (NYSE: ZETA), upgrading the stock from Equalweight to Overweight and increasing the price target to $17 from $12. The firm's analyst cited the company's consistent growth and potential for positive revisions as the basis for the upgrade.
The analyst pointed out that Zeta Global's valuation, at less than three times its forecasted fiscal year 2025 revenue, does not reflect the asset's growth of over 20% for the fifth consecutive year in fiscal year 2024. The company is on track to surpass $1 billion in revenue and generate more than $110 million in free cash flow (FCF) by fiscal year 2025.
Morgan Stanley highlighted Zeta Global's history of providing prudent guidance and indicated that upcoming catalysts could lead to upward revisions in both estimates and valuation. The firm's optimistic outlook is rooted in the company's strong financial performance and strategic business moves.
The upgrade to Overweight reflects Morgan Stanley's confidence in Zeta Global's continued growth trajectory and its ability to exceed market expectations. The new price target of $17 represents a significant increase from the previous target, underscoring the firm's belief in the company's value proposition.
InvestingPro Insights
Reflecting the latest analysis from Morgan Stanley, InvestingPro real-time data and insights provide additional context for investors considering Zeta Global Holdings Corp. With a market capitalization of $2.3 billion and a significant Price / Book multiple of 12.73, Zeta Global is trading at valuations that imply high expectations for future growth. Despite not being profitable over the last twelve months, analysts have revised their earnings upwards for the upcoming period. This optimism is underpinned by a strong revenue growth of 23.31% in the last twelve months as of Q1 2023, signaling robust business expansion.
InvestingPro Tips highlight that Zeta Global operates with a moderate level of debt and liquid assets that exceed short-term obligations, indicating a solid financial position. Moreover, the company's stock has seen a strong return over the last three months, with a price total return of 30.97%, and analysts predict the company will be profitable this year. While Zeta does not pay a dividend, the potential for capital appreciation is noted with a large price uptick over the last six months.
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