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On Tuesday, Citi analyst Peter Christiansen revised the price target for NerdWallet Inc (NASDAQ: NRDS) shares, dropping it to $11 from the previous $14, while maintaining a Neutral rating on the stock. According to InvestingPro analysis, the stock appears undervalued at current levels, with analysts’ targets ranging from $14 to $20. Christiansen adjusted the company’s growth expectations, now forecasting a lower compound annual growth rate (CAGR) over the next two to three years, transitioning from low double digits (LDD) to high single digits (HSD). The company has demonstrated strong fundamentals with a 14.71% revenue growth in the last twelve months and maintains an impressive 90.76% gross profit margin.
In his assessment, Christiansen noted that for the fiscal year 2025, his projections are slightly more conservative than the market consensus, estimating a 9% growth compared to the anticipated 10%. Furthermore, he expects NerdWallet’s adjusted operating income to be at the lower end of the company’s guided range of $50 to $60 million.
The analyst observed an incremental improvement in monthly unique users (MUUs) in the first quarter compared to the fourth quarter of 2024. However, these figures still fall short when compared year-over-year due to more challenging comparisons. The reduction in the target price from $14 to $11 is a reflection of these lowered estimates.
Christiansen pointed out that while auto insurance has been sustaining revenue growth, a Neutral/High Risk rating is maintained. He believes that for NerdWallet’s stock to regain its previous momentum, there will need to be stabilization in the Cards segment and a rebound in Loans. InvestingPro data reveals several positive indicators, including sufficient cash flows to cover interest payments and liquid assets exceeding short-term obligations. Subscribers can access 5 additional exclusive ProTips and a comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.
In other recent news, NerdWallet Inc. reported a strong financial performance for the fourth quarter of 2024, significantly surpassing earnings expectations. The company achieved earnings per share of $0.51, well above the forecasted $0.07, and reported revenue of $183.8 million, exceeding the anticipated $168.33 million. This represents a 37% increase in revenue year-over-year. Additionally, NerdWallet has projected Q1 2025 revenue between $187 million and $193 million, signaling continued growth. The company has also expanded its market presence by launching new products and entering the Australian market. Analysts from firms such as Barclays (LON:BARC) and KeyBanc have shown interest in the company’s strategic initiatives, including its focus on vertical integration and enhancing customer relationships. NerdWallet’s insurance segment experienced exceptional growth, with revenue increasing 821% year-over-year in Q4. Despite challenges in the lending environment, the company remains optimistic about its growth trajectory and strategic focus.
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