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On Wednesday, DA Davidson affirmed their positive stance on Riskified Ltd. (NYSE:RSKD) shares, maintaining a Buy rating and a $7.00 price target. The endorsement comes after Riskified released its fourth-quarter financial results, which surpassed expectations in terms of revenue and EBITDA. With a market capitalization of $830 million and revenue growth of 8.6% over the last twelve months, the company also provided a forecast for 2025 that DA Davidson considers conservative and aligns with the consensus.
The firm’s analysis highlighted Riskified’s successful quarter, noting significant advancements on several fronts. According to InvestingPro data, the company maintains a strong financial position with a current ratio of 7.13 and more cash than debt on its balance sheet. The company experienced increased contributions from products beyond its chargeback guarantee offerings, saw growth across various industry verticals, and continued to improve its EBITDA margins. These developments underpin DA Davidson’s decision to reiterate its Buy rating and price target, which is predicated on a 17 times multiple of Riskified’s projected 2026 free cash flow.
Riskified’s performance in the fourth quarter of 2024 indicates a robust trajectory, as the company not only delivered better-than-anticipated top-line results but also showed a positive EBITDA outcome. With a robust gross profit margin of 53.7% and analysts predicting profitability this year, this financial health is attributed to the company’s diversification of product contributions and its ability to achieve growth across different market segments. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report covering 1,400+ top US stocks.
The financial institution’s outlook on Riskified is based on detailed financial metrics, including the company’s future free cash flow. By applying a multiple to the projected 2026 free cash flow, DA Davidson has arrived at the $7 price target, which reflects their confidence in the company’s growth potential and financial strategy.
In conclusion, DA Davidson’s reiterated Buy rating and price target for Riskified shares are a vote of confidence in the company’s current performance and future prospects. The firm’s analysis indicates that Riskified is on a solid path, with diversified growth and improving profitability metrics that support its positive investment thesis.
In other recent news, Riskified Ltd. reported strong financial results for the fourth quarter of 2024, with earnings per share of $0.06, surpassing the forecast of -$0.0047. The company also exceeded revenue expectations, posting $93.53 million against the predicted $90.2 million. Despite these results, Riskified continues to face challenges, including a wider net loss of $4.1 million in the previous quarter, attributed to the loss of some large customers. Additionally, the company is reportedly considering a sale, working with Qatalyst Partners to explore proposals from potential buyers like digital payment processors and cybersecurity firms.
Riskified has also introduced a new product, Adaptive Checkout, designed to reduce false declines and increase conversion rates for online merchants. This solution aims to enhance the checkout process by tailoring it to the perceived risk level of each transaction. Analysts have noted Riskified’s robust performance and strategic initiatives, with the company planning to increase research and development capacity by 20% in 2025.
Furthermore, Riskified has been recognized for its AI-powered platform, earning a spot on CNBC’s World’s Top Fintech Companies list in 2024. The company maintains a high merchant retention rate, renewing all top 20 contracts, and plans to continue expanding its product offerings and market presence. As Riskified navigates these developments, investors and market participants will be closely monitoring any further announcements regarding the potential sale and the company’s strategic direction.
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