Benchmark maintains LiveRamp stock Buy rating, $45 target

On Wednesday, Benchmark analysts maintained a Buy rating on LiveRamp Holdings Inc. (NYSE: NYSE:RAMP) with a steady price target of $45.00. According to InvestingPro data, the company maintains strong financial health with a current ratio of 2.78x, indicating robust liquidity. The stock currently appears undervalued based on InvestingPro’s Fair Value analysis. The firm’s analysts highlighted the company’s initiative to simplify its pricing structure, which they believe could lead to increased revenue and cost savings. This move comes as LiveRamp demonstrates strong revenue growth, with a 14.5% increase in the last twelve months. The company is set to pilot a new pricing model with approximately 10% of its current and new customers during the second and third fiscal quarters, which is expected to last about six to nine months.

The new pricing strategy aims to streamline the existing complex system of 20-30 different metrics down to just five, introducing a system of credits. Under this model, customers will pay a platform access fee based on data volumes and a usage fee for utilizing data within LiveRamp’s platform and product suite. These fees will be correlated with a certain number of LiveRamp credits.

The redesign is anticipated to appeal to brand marketers, who are likely to commit to purchasing credits upfront in order to have better visibility and control over their annual budgets. On the other hand, publishers and platforms, which make up half of LiveRamp’s customer base, are expected to engage with the company on a usage basis. This would result in a lower platform access fee, with greater value being captured through usage.

Benchmark’s analysis suggests that this pricing overhaul could be beneficial for LiveRamp, as it simplifies the customer experience and could potentially lead to more predictable and scalable revenue streams. The analyst’s comments reflect an optimistic outlook on the company’s strategic move to refine its pricing structure and its potential impact on future financial performance. InvestingPro analysis reveals additional positive indicators, including expectations for net income growth this year. Discover 8 more exclusive InvestingPro Tips and comprehensive financial metrics in the Pro Research Report, available with your subscription.

In other recent news, LiveRamp Holdings Inc. is set to report its fiscal third-quarter earnings, with Benchmark analysts maintaining a Buy rating and a price target of $42.00. The firm expects LiveRamp’s total revenue to align with projections, fueled by an uptick in variable subscription revenue. Benchmark emphasizes the importance of the third fiscal quarter due to its role as the company’s largest renewal period, which may improve Recognized Purchase Obligations trends. Additionally, Annual Recurring Revenue is highlighted as a key metric for assessing subscription revenue over the next year. Meanwhile, Morgan Stanley (NYSE:MS) downgraded LiveRamp’s stock from Overweight to Equalweight, citing a lack of strong growth catalysts and challenges related to the phasing out of third-party cookies. The firm also noted that the benefits from LiveRamp’s acquisition of Habu have not met expectations. Despite these concerns, Morgan Stanley maintained a price target of $35.00, suggesting potential for growth, albeit at a slower pace. These developments reflect differing perspectives from analysts on LiveRamp’s current and future performance.

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