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On Thursday, Goldman Sachs analyst Eric Sheridan adjusted the price target on Ibotta Inc (NYSE:IBTA) shares, reducing it to $56 from the previous $89 while reaffirming a Buy rating on the stock. Currently trading at $63.09, Ibotta has seen its stock decline 8% in the past week. Sheridan’s review followed Ibotta’s fourth-quarter earnings for 2024, which presented several noteworthy points: although the company saw a healthy increase in total redeemers, this was offset by a shortfall in offer supply, leading to fourth-quarter revenues and a forward revenue outlook that didn’t meet expectations. According to InvestingPro data, the company maintains impressive gross profit margins of 86.35% and achieved revenue growth of 14.75% in the last twelve months.
The management of Ibotta acknowledged facing a challenging advertiser demand environment, which is anticipated to create medium-term headwinds. Despite these challenges, the company continues to see positive developments in third-party publisher supply, which Sheridan believes could support long-term growth prospects. InvestingPro analysis indicates the company maintains strong financial health with a "GOOD" overall score, holding more cash than debt on its balance sheet.
Sheridan also noted a near-term decrease in incremental margins, as the company plans to invest in advertising technology and market expansion strategies. Due to these factors, the analyst expects Ibotta’s stock to experience short-term volatility as the market processes management’s commentary regarding budget visibility extending beyond the first half of 2025. Ibotta’s stock is likely to be perceived as a "show me" story during this period, according to Sheridan.
Looking further ahead, Sheridan remains optimistic about Ibotta’s alignment with several long-term secular growth themes in the digital advertising and grocery sectors. The company’s efforts to enhance third-party publisher opportunities are seen as a positive move. However, Sheridan recognizes that the current lack of clarity regarding medium-term advertising budget trends is likely to continue to be a central issue for investors. Despite the lowered price target, the analyst reiterated a Buy rating, signaling continued confidence in the company’s long-term growth trajectory.
In other recent news, Ibotta Inc. reported its fourth-quarter earnings for 2024, revealing an earnings per share (EPS) of $0.67, which fell short of the expected $0.71. The company’s revenue was $98.4 million, reflecting a slight year-over-year decline. JMP Securities analyst Andrew Boone revised the price target for Ibotta, lowering it to $58 from $85, while maintaining a Market Outperform rating. Boone highlighted challenges Ibotta faces in attracting consumer packaged goods (CPG) budgets due to the industry’s demand for improved measurement tools. Despite these challenges, Ibotta is seen as having a significant opportunity to capture a larger share of digital advertising budgets in the CPG sector. The company is focusing on performance marketing and new partnerships to drive future growth, with plans to develop more sophisticated measurement tools. Additionally, Ibotta announced a workforce reduction and operational streamlining efforts as part of its strategy to improve performance. Looking ahead, the company provided guidance for Q1 2025, expecting revenue between $80 million and $84 million, indicating flat growth.
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