How are energy investors positioned?
On Thursday, Benchmark analyst Dan Kurnos increased the price target for Magnite (NASDAQ:MGNI) to $25.00, up from the previous target of $21.00, while reiterating a Buy rating on the stock. The stock, which has shown significant volatility with a beta of 2.52, has delivered a 46% return over the past year despite taking a recent 7.7% hit last week. Kurnos highlighted Magnite’s performance in a recent earnings report, which included a miss on headline numbers but a beat in the Connected TV (CTV) segment, as well as guidance for 2025 that met expectations.
Magnite’s management pointed out a recovery in DV+ weakness post-election during the first quarter, which contrasts with other industry reports from the programmatic space. This suggests that Magnite is gaining market share, supported by an 8.7% revenue growth in the last twelve months. Kurnos noted that while expectations were high prior to the earnings announcement, the company’s conservative stance regarding new win contributions and market conditions should not come as a surprise. InvestingPro analysis reveals that net income is expected to grow this year, with analysts projecting profitability for the company.
The analyst emphasized that any incremental upside is expected to significantly contribute to Magnite’s bottom line, potentially leading to a strong cash flow year. This could occur just as the company plans to address its convertible debt and possibly shift towards a more aggressive capital return policy for shareholders. According to InvestingPro data, Magnite maintains a healthy current ratio of 1.11 and operates with a moderate debt level, with total debt to capital at 21%.
Kurnos also remarked on the company’s CTV growth, which is impressive both with and without political advertising revenue—mid-teens growth including political ads and 20% growth excluding them. This positions Magnite among the best in the industry. Additionally, comments during the earnings call suggested that take rates have stabilized and could increase, which would further improve the company’s margins.
At a valuation of 10 times the estimated 2026 EBITDA before any stock reaction on Thursday, Kurnos believes that Magnite shares are significantly undervalued and recommends buying on any price weakness. Magnite remains a top pick for Benchmark. Based on InvestingPro’s comprehensive Fair Value analysis, the stock is currently trading near its Fair Value, with 12 additional ProTips and extensive financial metrics available to subscribers through the platform’s detailed Pro Research Report, which offers deep-dive analysis of 1,400+ top US stocks.
In other recent news, Magnite reported mixed results for its fourth quarter, with revenue surpassing expectations but earnings falling short. The company recorded Q4 revenue of $194 million, which exceeded the analyst consensus of $184.29 million and marked a 4% increase from the previous year. However, adjusted earnings per share were $0.34, missing the estimated $0.38. Contribution ex-TAC, a key metric excluding traffic acquisition costs, rose 9% year-over-year to $180.2 million. Notably, Contribution ex-TAC from connected TV grew 23% year-over-year to $77.9 million, surpassing the company’s guidance. Magnite’s CEO highlighted the strong performance in connected TV, attributing it to partnerships with major industry players. Looking ahead, the company expects total Contribution ex-TAC growth above 10% for the full year 2025. Additionally, Magnite forecasts high-teens to 20% growth in free cash flow for 2025. Despite the earnings miss, Q4 Adjusted EBITDA increased 9% year-over-year to $76.5 million, with the company ending 2024 with $483.2 million in cash and cash equivalents.
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