Ibotta stock rating cut to Market Perform by Raymond James

On Thursday, Raymond (NSE:RYMD) James analysts downgraded Ibotta Inc (NYSE:IBTA) stock from Outperform to Market Perform. This decision followed Ibotta’s fourth-quarter earnings report for 2024, which failed to meet expectations and presented a weaker outlook for the first quarter of 2025. The stock has already fallen 8% in the past week and is down nearly 39% over the last year. According to InvestingPro analysis, despite recent challenges, Ibotta appears undervalued compared to its Fair Value, with impressive gross profit margins of 86%.

According to Raymond James, the downgrade was influenced by multiple factors, including a significant reduction in offer supply, which management attributed to a suboptimal framework for return on investment (ROI) analysis, ineffective sales execution, and the annual cycling of consumer packaged goods (CPG) budget agreements. The analysts noted that while Ibotta is developing a new measurement platform that shows potential with some clients, they anticipate it will take several quarters for the company to demonstrate consistent improvement. Trading at an EV/EBITDA multiple of 44x, the stock’s rich valuation adds to investor concerns, though InvestingPro data shows the company maintains a solid financial health score of 2.88 (Good).

Ibotta’s recent performance history has been underwhelming, with the company missing targets in its quarterly reports since its initial public offering in April 2024. This pattern of underperformance has now extended to four consecutive quarters, encompassing both actual results and future outlooks.

The Raymond James analyst expressed that even if Ibotta manages to reverse its negative trends, investors will likely require evidence of sustained positive outcomes before restoring their confidence in the company. The analyst’s statement highlighted that the path to recovery for Ibotta could be lengthy, suggesting that it may take more than just a few weeks or months for the company to prove its capabilities to the market.

The downgrade serves as a sobering update on Ibotta’s status, signaling to investors that patience may be required as the company works to address its challenges and improve its standing with both clients and shareholders.

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 forecasted $0.71. The company’s revenue for the quarter was $98.4 million, marking a slight year-over-year decline. Following these results, Goldman Sachs analyst Eric Sheridan lowered Ibotta’s price target to $56 from $89 but maintained a Buy rating. Sheridan cited a challenging advertiser demand environment and a shortfall in offer supply as factors impacting the company’s revenue. Meanwhile, JMP Securities analyst Andrew Boone also revised Ibotta’s price target down to $58 from $85, maintaining a Market Outperform rating. Boone highlighted Ibotta’s struggles in attracting consumer packaged goods budgets and noted the potential impact of retail media growth on Ibotta’s market position. Despite these challenges, both analysts express optimism about Ibotta’s long-term growth prospects, with JMP Securities noting the company’s development of more sophisticated measurement tools and new sales leadership as potential drivers for future growth. These developments reflect the current state of Ibotta as it navigates a competitive market environment.

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