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On Wednesday, JMP Securities analyst Andrew Boone maintained a Market Perform rating on Taboola stock (NASDAQ:TBLA) following the company’s analyst day event. Currently trading at $3.01, InvestingPro analysis indicates the stock is undervalued, with a Financial Health Score rated as "GOOD." During the event, which took place in New York City, Taboola unveiled details about its performance advertising platform Realize, its product roadmap, go-to-market strategy, and Total (EPA:TTEF) Addressable Market (TAM).
Taboola expressed confidence in its ability to attract a broader range of advertisers by expanding performance campaigns to include display advertising, in addition to its existing native ads. With revenue of $1.77 billion in the last twelve months and a solid current ratio of 1.35, the company maintains strong liquidity to support its expansion plans. The company also plans to incorporate social ad creative, aiming to tap into budgets previously allocated to social platforms.
Management emphasized their cautious approach to guidance but indicated that first-quarter results for 2025 are expected to be at the higher end of their forecasts, despite current economic uncertainties related to trade and tariffs. InvestingPro data shows the company holds more cash than debt on its balance sheet, with analysts projecting profitability this year. Although no new financial guidance was provided beyond the first quarter, the potential for additional revenue from display advertising and social media could positively impact future earnings before interest, taxes, depreciation, and amortization (EBITDA), which currently stands at $123.8 million.
Boone noted that while the prospects of Realize seem promising, the platform is still in its early stages, and Taboola continues to face constraints on the demand side. The company is also navigating through uncertainties brought on by AI advancements in search technology and the dynamics of open web publishers.
In conclusion, although there is potential for upside to Taboola’s estimates, JMP Securities believes that the risks and rewards of investing in Taboola stock are currently balanced, leading to the decision to maintain the Market Perform rating.
In other recent news, Taboola has projected that its first-quarter financial results for 2025 will likely reach the upper end of its previously stated guidance ranges, with strong performance anticipated across key metrics like revenues and adjusted EBITDA. Additionally, the company has secured a $270 million revolving credit facility, which allowed it to pay off an existing term loan and is expected to generate annual interest savings between $3 to $5 million. This move is seen as a strategic effort to enhance liquidity and lower the cost of capital, extending debt maturities to 2030.
On the analyst front, Benchmark has lowered its price target for Taboola shares to $4.50 from $5.00, maintaining a Buy rating, while B.Riley downgraded the stock from Buy to Neutral, adjusting the target price to $4.00. Similarly, Citizens JMP has downgraded Taboola to Market Perform, citing a smaller-than-expected primary market for its native advertising. The company’s guidance for 2025 has been described as disappointing, with expectations of a downturn in year-over-year growth for its native ads segment.
Despite these challenges, Taboola is focusing on its new product, Realize, to transition from native advertising to direct response/performance marketing. Analysts have noted Taboola’s strong adjusted EBITDA margins and robust free cash flow as potential factors that could provide some downside protection for the stock. The company continues to navigate its strategic transition with a focus on leveraging its scalable data and technology.
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