Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
Thursday - JMP Securities released a preview for the internet sector, focusing on freelance platforms Upwork (NASDAQ:UPWK) and Fiverr. The firm highlighted the companies’ goals for EBITDA margins, with Upwork aiming for 35% by 2029 and Fiverr targeting 25% by 2027. This pursuit of profitability is seen as a rational move, particularly for Fiverr, which already boasts an impressive 82.65% gross profit margin and a perfect Piotroski Score of 9, according to InvestingPro data. The company’s strong fundamentals and current undervaluation suggest potential upside, mirroring strategies previously observed in similar companies like Wix (NASDAQ:WIX), which has a price target of $240, and other industry players such as Squarespace (NYSE:SQSP) and GoDaddy (NYSE:GDDY).
The report suggests that the leading freelancer platforms are following a pattern of achieving higher margins through more efficient marketing expenditures. This has been a successful approach for other companies in the sector, indicating a positive outlook for Upwork and Fiverr if they continue on this trajectory. For Fiverr, InvestingPro analysis reveals strong financial health with a current ratio of 2.99 and steady revenue growth of 7.45%. Subscribers to InvestingPro can access 12 additional key insights and a comprehensive Pro Research Report that provides deep-dive analysis of Fiverr’s financial position and growth prospects.
JMP Securities expressed confidence in the two companies’ current marketing investments. The firm believes that if Upwork and Fiverr maintain their strategic spending, their EBITDA could potentially exceed expectations within the next two to three years. This is attributed to what JMP Securities refers to as greater industry rationality, which could lead to improved financial performance for both platforms. Fiverr’s financial trajectory appears promising, with analysts predicting continued profitability and seven analysts recently revising their earnings expectations upward.
The analyst’s commentary on Upwork and Fiverr comes at a time when both companies are making concerted efforts to push toward profitability. By setting clear targets for their EBITDA margins, they are providing a roadmap for their financial strategies over the coming years.
In conclusion, JMP Securities sees a positive trend for Upwork and Fiverr as they aim for higher profitability. The analyst’s observations suggest that, with disciplined marketing investments and a rational approach to spending, both companies could surpass financial expectations in the near future.
In other recent news, Fiverr International Ltd (NYSE:FVRR). has seen significant developments. The company reported an 8% year-over-year increase in revenue for the third quarter, reaching $99.6 million, and an adjusted EBITDA of $19.7 million. This comes as Fiverr continues its strategic shift towards becoming a more comprehensive hiring platform, with investments in new tools like the Profession-Based Catalog, Hourly-Based Contracts, and Dynamic Matching.
RBC Capital has shown confidence in Fiverr, raising its price target to $35 from the previous $28, while maintaining a Sector Perform rating. The firm highlighted Fiverr’s effective platform design and impressive gross profit margins. However, BTIG has downgraded Fiverr’s shares from a "Buy" to a "Neutral" rating, citing potential risks posed by recent advancements in artificial intelligence and a deceleration in freelancing activity.
On the other hand, Citi maintained a "Buy" rating on Fiverr, raising its price target to $39.00, following the company’s strong third-quarter results. These recent developments indicate a promising direction for Fiverr, with an emphasis on product innovation and targeting larger enterprises. As Fiverr continues to evolve and adapt, investors can anticipate further growth in the company’s future.
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