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On Wednesday, Evercore ISI analyst Mark Mahaney adjusted the price target for ZipRecruiter (NYSE: ZIP) stock, reducing it to $10.00 from the previous $13.00 while maintaining an In Line rating for the company. The stock, currently trading at $6.73, has declined nearly 11% in the past week and is trading close to its 52-week low of $6.51. The adjustment follows ZipRecruiter’s fourth-quarter earnings, which presented a mixed outcome with revenues declining by 18% year-over-year. This marks an improvement compared to the third quarter’s 25% year-over-year decline. According to InvestingPro data, the company maintains impressive gross profit margins of 89.55%, demonstrating strong operational efficiency despite market challenges.
Mahaney noted that despite the continued challenges in fundamentals, there are early indications of potential recovery. ZipRecruiter’s management expects that revenue will return to growth in the fourth quarter of 2025, following a prolonged period of consecutive quarterly declines. The company has observed positive signs in hiring trends at the end of the fourth quarter, which have persisted into the first quarter to date. InvestingPro analysis shows the company maintains strong financial health with a current ratio of 7.41, indicating robust liquidity to support its recovery strategy. Two analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s trajectory.
The company remains cautiously optimistic about the fiscal year 2025 hiring outlook, following a significant 28-month downward trend in U.S. hiring activity. In response to the positive developments in hiring departments, ZipRecruiter plans to increase sales and marketing investments for the fiscal year 2025. They anticipate EBITDA margins to be around the mid-single digits percentage, compared to a 16.5% margin in the fiscal year 2024. For deeper insights into ZipRecruiter’s financial health and growth potential, investors can access comprehensive analysis and 15 additional ProTips through InvestingPro’s detailed research reports, which are available for over 1,400 US stocks.
The management team also conveyed a commitment to maintaining financial discipline. They expressed readiness to adjust operating expenses downward to secure higher EBITDA margins if hiring demand weakens, aligning with ZipRecruiter’s historical strategy of navigating through economic fluctuations.
Mahaney concluded that while there are positive signs, the timing and shape of the labor market’s recovery remain uncertain. As a result, Evercore ISI will remain on the sidelines until there is a clearer indication of a sustainable recovery in hiring.
In other recent news, ZipRecruiter reported its fourth-quarter and full-year 2024 financial results, exceeding revenue expectations with $111 million against a forecast of $107.77 million. Despite a challenging market, the company demonstrated resilience, although it faced a net loss of $12.9 million for the year. The company also saw a decline in full-year revenue by 27% to $474 million. ZipRecruiter highlighted strategic initiatives, including new product launches and the acquisition of Break Room, a UK-based employer rating site, which are expected to drive future growth. Additionally, the company noted a 19% increase in web traffic and a 30% growth in organic job seeker visits, indicating strong engagement with its platform.
Goldman Sachs recently adjusted its outlook on ZipRecruiter, reducing the 12-month price target from $9.00 to $8.00 while maintaining a Neutral rating on the stock. The firm noted that although ZipRecruiter surpassed revenue expectations in the fourth quarter, its guidance for the first quarter adjusted EBITDA was significantly below expectations due to increased investments in marketing and product initiatives. These investments are aimed at capitalizing on revenue opportunities, reflecting the company’s strategic focus. ZipRecruiter remains cautiously optimistic about potential revenue growth by the fourth quarter of 2025, projecting a recovery in the labor market. The company anticipates adjusted EBITDA margins in the mid-single digits, contingent on market stabilization.
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