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Investing.com - Evercore ISI lowered its price target on PubMatic Inc (NASDAQ:PUBM) to $12.00 from $16.00 on Wednesday, while maintaining an Outperform rating following the company’s second-quarter earnings report. The stock, currently trading at $8.34, has declined nearly 28% in the past week and 47% over the last six months, according to InvestingPro data.
PubMatic reported second-quarter revenue of $71 million and EBITDA of $14 million, exceeding Street expectations by 5% and 30% respectively. Despite the earnings beat, the company issued lower-than-expected guidance for the third quarter, projecting revenue between $61-$66 million compared to Street estimates of $71 million, and EBITDA of $7-10 million versus Street expectations of $15 million. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 1.32 and more cash than debt on its balance sheet.
Evercore identified emerging headwinds from a second large demand-side platform (DSP) partner in July, which the firm believes is now likely PubMatic’s largest demand partner. While challenges with one large DSP partner appear to be receding, the new issues have limited visibility on revenue recovery.
The analyst firm significantly reduced its estimates, cutting FY25 revenue and EBITDA projections by 6% and 26% respectively to $272 million and $53 million. FY26 revenue and EBITDA forecasts were reduced by 18% and 29% to $267 million and $63 million.
Despite these challenges, Evercore maintained its Outperform rating, citing "an attractive catalyst path ahead," particularly from potential Google ad tech trial remedies that could favorably impact PubMatic as early as the first half of 2026. The new $12 price target is based on 8x 2026 EV/EBITDA. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which covers key metrics and growth catalysts for over 1,400 US stocks.
In other recent news, PubMatic reported earnings that exceeded the high end of guidance for both revenue and adjusted EBITDA, demonstrating a solid quarter despite some challenges. However, the company faces headwinds from major demand-side platform (DSP) partners, leading to a reduced third-quarter revenue guidance approximately 10% below consensus. This guidance has resulted in several analysts lowering their price targets for PubMatic. RBC Capital reduced its price target from $14.00 to $11.00 while maintaining an Outperform rating. JMP Securities also lowered its price target from $16.00 to $12.00, citing similar DSP-related challenges. Scotiabank decreased its price target from $15.00 to $10.00, maintaining a Sector Perform rating, due to weak guidance that overshadowed modest top-line and gross margin beats. Wolfe Research adjusted its price target from $15.00 to $10.00, noting challenges but highlighting PubMatic’s healthy balance sheet and positive free cash flow. Meanwhile, Lake Street Capital Markets maintained its Hold rating with a price target of $9.50. These developments reflect the mixed sentiment among analysts regarding PubMatic’s future prospects.
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