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On Monday, Citi analysts adjusted their outlook on Outbrain Inc (NASDAQ:OB), reducing the price target from $4.00 to $3.90 while sustaining a Neutral rating on the company’s shares. The stock, currently trading at $3.46, has seen a significant decline of nearly 52% year-to-date, according to InvestingPro data. The firm’s analysts cited the first quarter of 2025 results, which aligned with or slightly surpassed expectations, and the second quarter’s ex-TAC performance, which met projections. However, they noted that the adjusted EBITDA for the second quarter fell short of Wall Street’s estimates.
Despite this, the analysts pointed out that management’s reaffirmation of the full-year 2025 outlook and the progress of integration efforts following a recent acquisition were positive signs. They highlighted that Outbrain is well on its way to achieving cost synergies, with $40 million anticipated to be realized within the year, contributing to the total expected synergies of $60 million. InvestingPro data shows the company maintains healthy liquidity with a current ratio of 1.13, while achieving revenue growth of 4.15% in the last twelve months.
The Citi analysts expressed optimism about the steps Outbrain has taken towards integration since the acquisition closed three months ago. They acknowledged that while the second quarter’s adjusted EBITDA guidance was below analysts’ expectations, management had anticipated this, attributing it to the fact that the cost synergies are expected to have a greater impact in the latter half of the year. InvestingPro analysis reveals the company’s gross profit margin stands at 24.31%, with analysts projecting improved profitability for the full year 2025. For deeper insights into Outbrain’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Outbrain’s resilience in the face of macroeconomic conditions was also noted as a positive factor, with the company not yet experiencing any significant headwinds. The Citi analysts concluded by expressing a cautious stance due to the macroeconomic uncertainty, indicating a desire for more clarity before adopting a more definitive view on the stock. They emphasized the importance of patience, even as they acknowledged the encouraging steps Outbrain has taken in its integration process.
In other recent news, Outbrain Inc. reported its Q1 2025 earnings, revealing a mixed financial performance. The company posted an earnings per share (EPS) of -$0.20, which did not meet the forecasted -$0.14. Revenue also fell short of expectations, coming in at $286.4 million against a projected $298.95 million. Despite these shortfalls, the company demonstrated resilience with strategic initiatives, such as the launch of its "Moments" vertical video solution, which has been adopted by over 70 publishers. In terms of financial highlights, Outbrain reported a 32% increase in revenue year-over-year, and a significant increase in adjusted EBITDA to $10.7 million. The company is also targeting $60 million in annualized cost synergies by 2026. Outbrain remains optimistic about its growth prospects, projecting a Q2 Ex TAC Gross Profit between $141 million and $150 million and an Adjusted EBITDA of $26 million to $34 million. Analyst firms have noted the company’s innovative approach and strategic focus on integration and efficiency.
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