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On Friday, Canaccord Genuity adjusted its outlook on DoubleVerify (NYSE: NYSE:DV), reducing its price target to $26 from $30 while sustaining a Buy rating on the shares. According to InvestingPro data, DoubleVerify maintains impressive financial health with a perfect Piotroski Score of 9 and strong gross profit margins of 82%. The adjustment follows DoubleVerify’s fourth-quarter performance, which fell short of market expectations, with both revenue and adjusted EBITDA missing consensus estimates by approximately 3%. Analysts at Canaccord pointed to two main factors for the underperformance: a significant DoubleVerify customer initiating a broad cost-cutting initiative that affected its advertising partners, including DoubleVerify, and a slowdown in brand advertiser spending around the election period.
Despite the weaker than anticipated results, DoubleVerify did report positive strides in strategic developments during the quarter. The company launched a content-level avoidance solution for Meta (NASDAQ:META) platforms and a Video Exclusion List Solution on TikTok. These new pre-bid activation features have garnered substantial interest, with nearly 200 customers in the pipeline. InvestingPro analysis indicates the company is currently trading below its Fair Value, suggesting potential upside opportunity despite trading at relatively high earnings multiples. Additionally, Scibids, which DoubleVerify recently integrated, saw a 50% year-over-year growth in FY24, surpassing the company’s initial projections. Connected TV (CTV) measurement volumes also experienced a significant increase, rising by 95% in Q4.
Looking ahead, DoubleVerify’s forward guidance did not meet expectations as the company chose to largely exclude any forecasted contribution from the major customer in question and to account for limited growth from the group of six clients that affected FY24’s results. While the stock has seen a 44.6% decline over the past year, it has shown signs of recovery with a 13.1% gain year-to-date. Following several quarters of disappointing performance and/or projections, Canaccord suggests that it may take multiple quarters of consistent execution for DoubleVerify to regain investor trust.
Canaccord remains optimistic about DoubleVerify’s potential to accelerate growth later in the year, especially if the broader environment for brand spending stabilizes. The firm highlights several growth levers for the company, including its social activation products on Meta, opportunities to upsell Moat’s recently acquired client base, and the integration of Scibids and other direct response solutions. Supporting this optimistic outlook, InvestingPro data shows the company maintains healthy revenue growth of 14.7% and strong cash flows that sufficiently cover interest payments. For deeper insights into DoubleVerify’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, DoubleVerify has reported its fourth-quarter 2024 earnings, revealing that the company missed revenue estimates. DoubleVerify posted $191 million in revenue, falling short of the forecasted $197 million. Despite this miss, the company achieved a 15% year-over-year growth in total revenue for 2024, amounting to $657 million. The firm also reported an adjusted EBITDA margin of 33% and an increase in net cash from operating activities by 33% to $160 million. Additionally, DoubleVerify has announced its acquisition of RockerBox, which aims to enhance its performance measurement capabilities. Looking ahead, DoubleVerify has set its Q1 2025 revenue guidance between $151 million and $155 million. In other developments, Goldman Sachs downgraded DoubleVerify’s stock rating from Buy to Neutral, adjusting the price target to $20.00 from $24.00, citing a challenging demand environment. These recent developments highlight the company’s ongoing efforts and challenges in navigating market conditions.
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