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On Thursday, Canaccord Genuity reaffirmed its positive stance on Nexxen (NASDAQ:NEXN) shares, maintaining a Buy rating and a price target of $14.00. According to InvestingPro data, the company appears slightly undervalued based on its Fair Value analysis. Nexxen’s first-quarter results surpassed expectations, with both contribution ex-TAC (traffic acquisition costs) and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) exceeding forecasts. The strong performance was attributed to the company’s continued growth in Connected TV (CTV) services, which saw a year-over-year increase of over 40%.
The company’s CTV segment has benefited from the growing recognition of Nexxen’s comprehensive platform and data solutions. The adjusted EBITDA outperformance also reflected the reversal of a doubtful allowance provision, productivity gains, and a slower pace of hiring amid macroeconomic uncertainty. InvestingPro data shows impressive gross profit margins of 83.3% and a healthy balance sheet with more cash than debt. Despite these headwinds, Nexxen is actively investing in its future growth, focusing on expanding its sales force in the United States and Europe and developing new artificial intelligence solutions for advertisers.
Nexxen has reiterated its fiscal year 2025 guidance, which assumes current spending trends and no significant change in the macroeconomic environment. However, the company did note some softness in the advertising market in April, as a few advertisers postponed campaigns to the second half of the year. This observation, along with Nexxen’s robust year-to-date stock performance of 16.2% and impressive one-year return of over 100%, may be exerting modest pressure on the shares today. InvestingPro subscribers have access to 15+ additional exclusive insights about Nexxen, including detailed financial health scores and comprehensive valuation analysis.
Canaccord’s analyst highlighted that while the uncertainty in the market and the dynamic nature of US trade policy are recognized, Nexxen’s valuation remains attractive, with a P/E ratio of 21.25x and strong free cash flow yield. The firm anticipates that the upcoming Investor Day will further clarify the company’s long-term strategic direction, reinforcing their positive outlook on Nexxen stock.
In other recent news, Nexxen has reported strong financial results for the first quarter of 2025, surpassing analyst expectations. The company achieved adjusted earnings per share of $0.16, significantly beating the anticipated $0.07, with revenue reaching $78.33 million, higher than the projected $73.2 million. Notably, Nexxen’s connected TV (CTV) revenue saw a 40% year-over-year increase, contributing significantly to its programmatic revenue. Despite these achievements, Nexxen has chosen to maintain its full-year 2025 guidance, citing a temporary softness in the advertising market due to delays in campaign spending. Citizens JMP responded to these results by raising its price target for Nexxen shares to $15.00, maintaining a Market Outperform rating, reflecting confidence in the company’s strategies and future growth prospects. Additionally, Nexxen completed a $50 million share repurchase program and initiated another $50 million buyback plan. The company concluded the quarter with $164.7 million in cash and no long-term debt, indicating a strong financial position. Nexxen continues to monitor market conditions and expects postponed advertising spending to resume later in the year.
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