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On Thursday, Evercore ISI made an adjustment to the price target of Cardlytics (NASDAQ:CDLX) shares, reducing it to $3.00 from the previous $4.00 while keeping the "In Line" rating steady. This move comes after a quarterly financial report that surpassed expectations in some areas but also presented a cautious outlook for the future. According to InvestingPro data, the company operates with a significant debt burden, with a debt-to-equity ratio of 3.18, which may impact its financial flexibility moving forward.
Cardlytics, which specializes in advertising platforms for financial institutions, has been grappling with campaign delivery issues, but showed improvement in the fourth quarter. The company also reported higher than anticipated pipeline wins, which helped balance out the expected decrease in spending from major accounts in the restaurant and travel sectors. Despite these improvements, InvestingPro analysis shows the stock has declined significantly, falling nearly 77% over the past year. Additionally, Cardlytics demonstrated strong operational expense discipline, resulting in a notable fourth quarter EBITDA beat, though trailing twelve-month EBITDA remains negative at -$36.6M.
Despite these positive developments, the company’s forecast for the first quarter was subdued, and management commentary regarding the rest of fiscal year 2025 suggested a more gradual recovery in billings than Evercore ISI had initially anticipated. According to the analyst from Evercore ISI, while there are some positive indicators and signs of progress, the path to achieving sustainably positive adjusted EBITDA now appears to be longer and less direct than previously thought.
The financial performance of Cardlytics in the fourth quarter, combined with the management’s guidance for the upcoming periods, influenced Evercore ISI’s decision to lower the price target. The firm’s analysts believe that while the company is making strides in resolving its campaign delivery issues and has seen some success in winning new business, the overall recovery in billings and the journey to positive adjusted EBITDA will take more time to materialize.
In other recent news, Cardlytics reported its fourth-quarter results for 2024, surpassing expectations with revenue at $74 million, which exceeded the forecast of $64.29 million. Despite a 16% year-over-year decline in revenue, the company demonstrated resilience with positive adjusted EBITDA of $2.5 million for the full year. Analysts from Craig-Hallum and BofA Securities adjusted their price targets for Cardlytics, with Craig-Hallum reducing it to $3.00 and maintaining a Hold rating, while BofA cut it to $2.50, keeping an Underperform rating. These changes reflect ongoing challenges, including a 12% year-over-year billing decline due to the loss of key accounts.
The company is making progress in its transition to engagement-based pricing, with 61% of U.S. advertisers now on board. Cardlytics also signed a significant neobank partnership, expected to ramp up fully in the first quarter, and is advancing its micro-targeting solutions. Needham analysts maintained a Hold rating, citing improved execution and effective cost management as reasons for optimism, though they noted the recovery might be inconsistent. The company’s strategic initiatives, such as addressing under-delivery issues and focusing on high-growth areas, are seen as steps toward long-term recovery.
Cardlytics’ management remains optimistic about future trends, projecting Q1 2025 billings between $91.5 million and $94.5 million. The company continues to focus on innovation and consumer engagement, aiming for positive adjusted EBITDA by year-end. Despite macroeconomic uncertainties, Cardlytics is working to strengthen its network and expand its partnerships, offering a glimpse of potential growth in the coming quarters.
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