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On Thursday, JMP analysts maintained their Market Outperform rating and $11.00 price target for Nexxen (NASDAQ:NEXN), which currently trades at $9.50. The analysts highlighted Nexxen’s guidance for 2025, which suggests a 130 basis points (bps) acceleration from the previous year, excluding Traffic Acquisition Costs (TAC). Despite expecting roughly flat EBITDA margins year-over-year (Y/Y) for 2025 due to investments in new generative AI products launching that year, analysts anticipate a return to EBITDA margin expansion in 2026. The company maintains impressive gross profit margins of 83.3% and trades at a P/E ratio of 14.55x. According to InvestingPro analysis, Nexxen appears undervalued, with analyst targets ranging from $13 to $25.40.
Nexxen’s sales execution has seen significant improvement, with revenue growing 10.09% in the last twelve months, and the company is experiencing positive effects from Connected TV (CTV) trends. The analysts noted that Nexxen’s unique data assets, especially its exclusive access to VIDAA’s global Automatic Content Recognition (ACR) data, are enhancing demand for its platform. This factor, combined with the company’s aggressive share repurchase program and strong free cash flow yield of 24%, presents a favorable risk/reward scenario for Nexxen’s shares, which are currently valued at 3.7 times their projected 2026 EBITDA.
Additionally, the analysts believe that Nexxen’s data licensing potential is still in the early stages. The company’s partnerships with The Trade Desk (NASDAQ:TTD) and StackAdapt are expected to grow, further bolstering Nexxen’s market position. These partnerships are instrumental in scaling Nexxen’s reach and enhancing its data monetization capabilities. For deeper insights into Nexxen’s financial health (rated "GOOD" by InvestingPro) and comprehensive analysis, investors can access the detailed Pro Research Report, available exclusively to subscribers.
The JMP analysts emphasized the strategic investments Nexxen is making in new generative AI products set for a 2025 release. These investments are seen as a critical step towards future growth and are expected to contribute to the company’s financial performance in the long term.
In summary, Nexxen’s commitment to returning capital to shareholders through share repurchases, coupled with its strategic investments and robust sales execution, underpin the analysts’ positive outlook on the stock. The company’s unique data assets and growing partnerships are key drivers expected to support Nexxen’s performance in the coming years.
In other recent news, Nexxen International reported its Q4 2024 earnings, showcasing a significant financial performance that exceeded market expectations. The company achieved an earnings per share (EPS) of $0.48, which was substantially higher than the projected $0.16. Nexxen also reported a revenue of $112.3 million, surpassing the anticipated $105.02 million. Additionally, the company’s adjusted EBITDA increased by 38% compared to the previous year. The strong earnings results reflect Nexxen’s strategic focus on AI and connected TV (CTV) innovations. In terms of analyst activity, RBC Capital Markets and Needham and Company participated in the earnings call, highlighting the company’s robust performance and strategic execution. Nexxen’s ongoing strategic initiatives, particularly in AI and CTV, are expected to bolster its market position in the coming year.
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