DoD tests AI models that make it easy to switch from vendors like Palantir
On Monday, JPMorgan has updated its outlook on LegalZoom.com Inc (NASDAQ:LZ), increasing the price target to $12.00 from the previous $11.00. The firm maintains its Overweight rating on the company’s stock. In a recent statement, JPMorgan highlighted their decision to add LegalZoom to the Analyst Focus List and expressed a positive view on the company’s future financial performance. According to InvestingPro data, five analysts have recently revised their earnings estimates upward, with analyst targets ranging from $8.00 to $11.50. The stock has shown strong momentum, gaining over 23% year-to-date.
LegalZoom’s positioning to outperform market expectations for its revenue and earnings was a key factor in JPMorgan’s revised price target. The company’s current valuation was noted as trading at 7 times its expected enterprise value to EBITDA (EV/EBITDA) for the year 2026. This is significantly lower than the valuation multiples of similar technology companies serving small to medium-sized businesses (SMBs), such as GoDaddy Inc. (NYSE:GDDY) and Wix.com Ltd. (NASDAQ:WIX), which trade at 15 times and 16 times EV/EBITDA, respectively. InvestingPro analysis indicates that LegalZoom maintains impressive gross profit margins of 65.5% and currently appears undervalued based on its Fair Value calculation. Discover 13 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
The analyst at JPMorgan underscored the potential for LegalZoom’s subscription revenue to accelerate through the forecasted year 2025. This anticipated growth, along with the market’s increasing confidence in the company’s strategic changes aimed at becoming more defensive, is expected to drive the stock price upward. The statement also suggested that the significant discount of LegalZoom’s stock compared to its technology peers provides room for a positive re-rating, enhancing the investment appeal. The company’s overall financial health score is rated as "GOOD" by InvestingPro, with particularly strong scores in growth and profitability metrics.
LegalZoom’s management has previously set guidance for an uptick in subscription revenue, which is seen as a pivotal element in the company’s ongoing transformation. JPMorgan anticipates that as the market begins to recognize and believe in the company’s defensive strategy, the stock will likely experience an upward trend.
The assessment by JPMorgan reflects a bullish stance on LegalZoom’s ability to exceed market expectations and suggests a favorable investment opportunity due to the company’s comparatively low valuation in the technology sector.
In other recent news, LegalZoom.com Inc. reported its first-quarter 2025 financial results, highlighting a 5% year-over-year increase in revenue, reaching $183.1 million, surpassing analyst expectations of $177.12 million. The company also met earnings per share forecasts with $0.13 and demonstrated significant growth in subscription revenue, which rose by 8%. LegalZoom’s strategic focus on recurring revenue streams is evident, with subscriptions now making up over 60% of its business. The company has reaffirmed its full-year revenue growth target of approximately 5% and projects double-digit subscription revenue growth by the fourth quarter of 2025.
Additionally, LegalZoom completed the acquisition of Formation Nation in February, contributing approximately $8.6 million to first-quarter revenues. The integration is expected to enhance customer acquisition and expand LegalZoom’s market reach. Analyst firms have observed LegalZoom’s strong positioning and strategic initiatives, with some highlighting the company’s effective cost management and marketing strategies. LegalZoom’s emphasis on subscription models and strategic partnerships continues to shape its growth trajectory in a competitive market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.