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Craig-Hallum initiated coverage on Nexxen (NASDAQ:NEXN) shares with a Buy rating and a price target of $15.00. The firm sees significant growth potential for the company, highlighting Nexxen's capability to produce robust long-duration (LDD) top-line growth and maintain mid-30s EBITDA margins. The analyst noted that despite Nexxen's strong fundamental trajectory, the stock is currently undervalued, trading at less than 3x its projected 2026 adjusted EBITDA.
Nexxen's current valuation is notably lower than the average of the broader adtech category, which carries a mean 7x enterprise value (EV) to EBITDA multiple. With a current EV/EBITDA of 4.83x and market capitalization of $543 million, the company trades below InvestingPro's calculated Fair Value, suggesting potential upside. The $15 price target set by Craig-Hallum reflects nearly a 100% increase from the stock's current levels and is based on a conservative discount to the peer group multiple on fiscal year 2026 EBITDA estimates.
The firm has positioned its EBITDA estimates below the consensus to account for potential market volatility stemming from recent tariff actions. However, the analysts at Craig-Hallum suggest that any improvement in macroeconomic conditions could lead to a rise in peer multiples. They also pointed out that a return to the 12x EV/EBITDA multiple, which the industry saw just two months prior, could present a $30 price opportunity for Nexxen shares, implying another potential doubling from the firm's current price target.
Craig-Hallum's outlook for Nexxen is optimistic, with the belief that the stock's current price does not reflect its growth prospects or industry position. The firm's analysis indicates that Nexxen has the potential to significantly increase in value, especially if the broader market conditions improve and the company continues on its projected financial path. For deeper insights into Nexxen's valuation and growth metrics, including 8 additional ProTips and comprehensive financial analysis, investors can access the full research report on InvestingPro.
In other recent news, Nexxen International Ltd. reported its Q4 2024 earnings, significantly exceeding analysts' expectations with an earnings per share (EPS) of $0.48 compared to the forecasted $0.16. The company also surpassed revenue expectations, reporting $112.3 million against the anticipated $105.02 million. Nexxen's Board of Directors has approved a new $50 million share repurchase program following the completion of its current program, which still has approximately $5.5 million remaining. Analysts at JMP maintained a Market Outperform rating for Nexxen, citing the company's strategic investments in generative AI products and its unique data assets, which are enhancing demand for its platform. Nexxen's partnerships with The Trade Desk (NASDAQ:TTD) and StackAdapt are expected to grow, supporting the company's market position and data monetization capabilities. The company has also seen improvements in sales execution and benefits from Connected TV trends, contributing to its robust financial performance. Nexxen plans to continue focusing on AI-driven platform enhancements and expects adjusted EBITDA of $125 million for the full year 2025.
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