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On Wednesday, Lake Street Capital Markets made a significant adjustment to the price target of TechTarget , Inc. (NASDAQ:TTGT), reducing it to $12 from the previous $24, while still maintaining a Buy rating on the stock. The firm’s analyst cited the company’s role in connecting technology buyers and sellers and its large audience reach as key factors in its growth prospects. Currently trading at $8.09, the stock has declined 59% year-to-date and is near its 52-week low of $7.66. According to InvestingPro analysis, the stock appears undervalued at current levels.
TechTarget, known for its extensive reach into a permissioned audience of 50 million first-party users across over 220 technology-specific websites, provides high-quality content that influences and informs technology stakeholders. The company’s data-driven services are designed to deliver measurable outcomes for clients, leveraging its unique targeting capabilities. With a market capitalization of $578 million and trailing twelve-month revenue of $261 million, TechTarget maintains a healthy gross profit margin of 60%. InvestingPro subscribers can access 12 additional key insights and a comprehensive Pro Research Report about TechTarget’s financial health and market position.
The analyst’s investment thesis is based on the expectation that the recent merger with Informa (LON:INF) Tech will lead to increased scale, product offerings, and geographic reach. This, in turn, is anticipated to position TechTarget for market share gains and enhanced financial performance over the long term. However, InvestingPro data indicates the company operates with a significant debt burden, with a debt-to-equity ratio of 3.55x and short-term obligations exceeding liquid assets.
The revised price target of $12 is derived from an 8x multiple of the company’s projected 2025 Adjusted EBITDA (AEBITDA) plus anticipated run rate synergies, less net debt, and divided by the number of fully diluted shares. The analyst’s AEBITDA estimate for 2025 is $108 million, with an additional $10 million in annualized expense synergies expected by the fourth quarter of 2025.
Lake Street’s valuation approach calculates the target price based on the sum of the 2025 AEBITDA forecast and the run rate synergies, multiplied by eight, then subtracting $100 million in net debt, and finally dividing by 73.1 million fully diluted shares outstanding. This methodology reflects the firm’s confidence in TechTarget’s ability to capitalize on the synergies from its recent business combination and achieve robust financial results in the coming years. The company’s current EBITDA stands at $21 million, with analysts expecting improved profitability this year despite projected sales decline.
In other recent news, TechTarget, Inc. has been the subject of various analyst assessments and strategic developments. The company, which recently completed the integration of Informa Tech’s digital business, is expected to achieve mid-single-digit revenue growth and adjusted EBITDA margins in the low 20 percent range over the next few years, according to JPMorgan, which initiated coverage with a Neutral rating and a price target of $18.00. Meanwhile, Needham analysts adjusted their price target for TechTarget from $40.00 to $25.00, while maintaining a Buy rating, citing expectations for the company’s fiscal year 2025 guidance to align with the current consensus of approximately $512 million in revenue.
Additionally, Raymond (NSE:RYMD) James downgraded TechTarget to Market Perform from Outperform, highlighting challenges related to a merger process and slow recovery in IT spending. In strategic developments, TechTarget announced a partnership with Demandbase to enhance account-based marketing strategies, combining their intent data capabilities to improve customer engagement. This collaboration aims to improve marketing effectiveness and conversion rates, with general access expected by April 2025. These recent developments reflect the company’s ongoing adjustments amid a challenging macroeconomic environment and evolving market dynamics.
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