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On Friday, Rimini Street shares (NASDAQ:RMNI) received an upgrade from Alliance Global Partners (NYSE:GLP), shifting from a Neutral to a Buy rating. According to InvestingPro data, the stock has shown impressive momentum with a 73% surge over the past six months, while maintaining a market capitalization of $277 million. The firm also raised the price target significantly to $6.50, up from the previous $2.25. The revision in the price target is grounded in the application of an unchanged enterprise value to EBITDA (EV/EBITDA) multiple of 8x, which is now based on projections for the year 2026, as opposed to the earlier basis of 2025.
The decision to maintain the 8x multiple, considered low by the firm, is influenced by ongoing litigation concerns, the exclusion of roughly $8 million in yearly cash expenses from EBITDA calculations, and recent hurdles in business expansion. Despite these factors, Alliance Global Partners justifies the substantial discount applied in their valuation. The company currently trades at an EV/EBITDA multiple of 7x, with a robust gross profit margin of 60%.
The upgrade comes with an optimistic view of Rimini Street’s financial prospects, as the company is anticipated to recover $58 million in cash over the coming quarters from Oracle (NYSE:ORCL). This expected cash influx, combined with a stronger profit forecast, underpins the belief that Rimini Street presents a lower risk profile. This is especially relevant when considering the stock is currently trading at an EV/EBITDA multiple of just 4x based on the firm’s 2025 estimates.
Rimini Street’s stock movement on Friday reflects the updated analyst perspective, which is buoyed by the prospect of the company recouping significant cash and demonstrating a more robust profit outlook than previously expected. The market’s response to the upgrade and revised price target will be of interest to investors monitoring Rimini Street’s performance and valuation in the technology services sector. InvestingPro analysis suggests the stock is currently undervalued, with analysts forecasting profitability this year. Discover more insights and 6 additional ProTips for Rimini Street through InvestingPro’s comprehensive research platform.
In other recent news, Rimini Street Inc. reported its Q4 2024 earnings, showcasing a revenue of $114.2 million, which exceeded analyst expectations of $102.51 million. The company’s earnings per share (EPS) met forecasts at $0.07. Notably, Rimini Street’s quarterly revenue saw a 1.9% year-over-year increase, while full-year revenue experienced a slight decline of 0.6%, totaling $428.8 million. The company highlighted its strategic efforts to expand service offerings and partnerships, including a collaboration with ServiceNow (NYSE:NOW), aimed at fostering future growth.
Additionally, Rimini Street’s Q4 billings rose by 7.1% year-over-year, reaching $172.1 million, indicating positive momentum in client acquisitions and renewals. Despite strong financial performance, the company’s stock experienced a decline during regular trading hours, though it rebounded slightly in aftermarket trading. Rimini Street has also been involved in ongoing litigation with Oracle, with recent developments including a favorable appellate court decision for Rimini Street. The company anticipates providing guidance again in 2025, driven by strategic alliances and investments in the federal sector.
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