How are energy investors positioned?
Thursday, Benchmark analysts lowered the price target on Magnite (NASDAQ:MGNI) to $24 from $25, while still holding a Buy rating on the stock. With the stock currently trading at $14.37, analysts see significant upside potential, with targets ranging from $11 to $25. The adjustment comes as the firm acknowledges the company’s adept handling of market expectations and its positive outlook despite a modestly reduced forecast. According to InvestingPro analysis, Magnite appears undervalued based on its Fair Value calculation, with additional insights available in the comprehensive Pro Research Report.
Magnite’s management was praised for guiding the market to anticipate potential macroeconomic softness that has not yet materialized, effectively mitigating the impact of any potential downturn. The analysts noted that even with a conservative forecast for 2025 rolling into 2026, Magnite’s shares are trading at a multiple of 8x EV/EBITDA, which is considered attractive given the expected average revenue growth and strong EBITDA margin projections. The company maintains a healthy financial position, with InvestingPro data showing a "GOOD" overall financial health score and liquid assets exceeding short-term obligations.
The company’s revenue, excluding traffic acquisition costs (ex-TAC), is anticipated to grow more than high-single-digits on average over the medium term. Additionally, EBITDA margins are projected to push towards 35% or higher. The analysts highlighted the cost side of Magnite’s equation as an underrated aspect of the recent earnings call, pointing out that incremental revenue dollars are now yielding higher margins.
Benchmark also mentioned the potential benefits for Magnite from the Google (NASDAQ:GOOGL) adtech ruling, suggesting that the company could be the largest beneficiary of this decision, which would further enhance margins.
The firm concluded that the sentiment around Magnite is shifting, expressing confidence that it is only a matter of time before the stock climbs back into the $20+ range.
In other recent news, Magnite Inc. reported its first-quarter 2025 financial results, showcasing a revenue of $156 million, which exceeded analyst forecasts of $142.29 million. This performance marked a 4% year-over-year increase, with significant contributions from the CTV and DBplus segments. The company also reported an improved net loss of $10 million, down from $18 million the previous year, and a 47% rise in adjusted EBITDA, highlighting enhanced operational efficiency. In another development, ITN and Magnite announced a partnership to enhance local TV advertising through programmatic transactions of live linear ads. This collaboration aims to modernize the $21 billion local TV advertising market in the U.S. by integrating traditional TV advertising with digital efficiency. Additionally, Magnite’s recent collaboration with multiple Fox television stations has already seen successful programmatic transactions, indicating positive industry reception. The company remains optimistic about growth in CTV and programmatic advertising but maintains a cautious outlook due to potential economic uncertainties.
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