B.Riley raises Taboola stock rating to Buy, sets $4 target

Published 08/05/2025, 05:14
© Taboola PR

On Thursday, B.Riley analyst Zach Cummins (NYSE:CMI) upgraded Taboola stock (NASDAQ:TBLA) from Neutral to Buy, setting a price target of $4.00. Cummins highlighted the stock’s attractive valuation and the company’s solid financial outlook despite broader macroeconomic uncertainties. Taboola’s shares ended the previous trading session at $3.06, which presents a potential upside of approximately 31% to the analyst’s price target. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, with analyst targets ranging from $3.34 to $4.50.

The upgrade is based on several factors, including Taboola’s current valuation, which is seen as favorable with the stock trading at a forward-year enterprise value to adjusted EBITDA multiple of around 4.5 times. This figure is below the three-year median multiple of 6.5 times. InvestingPro data shows the company maintains a strong financial health score of "GOOD" and holds more cash than debt on its balance sheet, with a comfortable current ratio of 1.35. Additionally, Cummins noted that the company’s reaffirmed outlook for fiscal year 2025 helps mitigate risks in the second half of that year within a challenging advertising market.

The analyst also pointed out Taboola’s strong adjusted EBITDA margins, which are at 30%, and its robust free cash flow conversion. Taboola is projected to generate $114 million in free cash flow in fiscal year 2025. These financial strengths are seen as supporting the company’s aggressive share repurchase activity, which has seen $92 million year-to-date with about $140 million remaining on the authorization. InvestingPro confirms this strong financial position, highlighting a significant free cash flow yield of 14% and noting management’s aggressive share buyback program as a key strength. For deeper insights into Taboola’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Lastly, Cummins mentioned the potential of Taboola’s Realize platform, which, although not expected to impact the profit and loss statement until 2026, could provide incremental upside versus fiscal year 2025 expectations. The platform is anticipated to contribute to a stronger ex-TAC (Traffic Acquisition Costs) gross profit growth rate in fiscal year 2026, acting as a ’call option’ for investors. InvestingPro data reveals strong revenue growth of 22.68% in the last twelve months, suggesting the company’s growth initiatives are gaining traction.

In other recent news, Taboola reported its first-quarter 2025 earnings, surpassing expectations with a revenue of $427 million, which marks a 3% year-over-year growth. The company’s earnings per share showed a loss of $0.03, which was better than the anticipated loss of $0.05. Taboola’s strategic initiatives, including the launch of its Realize platform, have contributed to its strong performance, with the company providing a full-year revenue guidance between $1.84 billion and $1.89 billion. Analysts have noted the company’s promising trajectory, with a focus on performance-driven advertising and strategic partnerships. The company has also been active in share repurchases, with approximately 16.2 million shares bought back in the first quarter. Taboola’s management remains optimistic about continued growth, supported by its new ad formats and AI integration. Looking ahead, the company expects stronger revenue growth in the latter half of 2025, driven by its innovative platforms.

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