On Thursday, Jefferies assumed coverage on Outbrain Inc (NASDAQ:OB), maintaining a Hold rating with a new price target of $4.00. The firm expressed a cautious outlook for the company, highlighting challenges it may face in meeting its full-year 2024 revenue guidance.
Outbrain, a company specializing in recommending web content to users, has several initiatives underway, such as Onyx, Keystone, and Amplify, aimed at driving incremental revenue. Despite these efforts, Jefferies points out that the aggressive forecast for the fiscal year 2025, which anticipates "double digit" revenue growth and a 20% EBITDA margin, could be ambitious. This is especially true if the macroeconomic environment does not stabilize, as the forecast contrasts with Jefferies' own estimate of 5% revenue growth and a 13% EBITDA margin for fiscal year 2024.
The price target set by Jefferies is based on a multiple of three times the firm's estimated EBITDA for fiscal year 2025. The $4.00 price target reflects the firm's assessment of the financial outlook and potential risks associated with Outbrain's performance in a volatile market.
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