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On Tuesday, Keefe, Bruyette & Woods analyst Tommy McJoynt adjusted the price target for MediaAlpha (NYSE: MAX) shares, reducing it from $22.00 to $19.00 while reaffirming an Outperform rating. McJoynt’s review followed MediaAlpha’s recent financial performance, which showcased a strong quarter with an Adjusted EBITDA (AEBITDA) of $36.7 million. This figure surpassed Keefe, Bruyette & Woods’ projection of $32.5 million, the consensus estimate of $32.7 million, and the company’s own guidance range of $29.5 million to $32.5 million. The increase in AEBITDA was attributed to higher-than-anticipated margins, which came in at 12.2% compared to the expected 11.2%.
MediaAlpha also reported significant year-over-year growth, with transaction value and revenue up by 202% and 157%, respectively. These increases slightly exceeded expectations and were primarily driven by strength in the Property and Casualty (P&C) insurance sector. Despite the positive performance in the recent quarter, the guidance for the first quarter of 2025 was less optimistic. The company’s revenue projection fell 16% short of consensus estimates, and the AEBITDA forecast was 15% below expectations. This conservative outlook is seemingly due to moderating P&C pricing, which is not entirely compensated by the robust volumes anticipated.
The company expects to see improvement throughout the year despite the cautious near-term guidance. In the midst of these financial disclosures, there was no new information provided regarding the ongoing Federal Trade Commission (FTC) complaint against MediaAlpha. The only mention was that the company has set aside a $7 million legal accrual, which is described as the lower end of reasonably estimated losses.
In light of the recent financial results and future expectations, McJoynt has adjusted the estimated AEBITDA for 2025 and 2026 downward by 10-15%. Despite the reduction in the price target and earnings estimates, the Outperform rating suggests that Keefe, Bruyette & Woods continues to see the stock favorably in the longer term.
In other recent news, MediaAlpha’s fourth-quarter earnings report presented a mixed financial performance, with earnings per share (EPS) of $0.08 falling short of the forecasted $0.22. However, the company managed to exceed revenue expectations, reporting $300.6 million against the anticipated $298.3 million. The company also achieved a record transaction value of $499.2 million, driven by strong growth in insurance verticals and partnerships in the Medicare Advantage market. Despite these accomplishments, MediaAlpha’s first-quarter outlook did not meet previous expectations, primarily due to ongoing challenges in its Health segment. Goldman Sachs analysts responded by lowering their price target for MediaAlpha to $14 from $23, while maintaining a Buy rating on the stock. The firm’s long-term outlook remains positive, citing the company’s alignment with long-term growth themes in the insurance digital advertising market. Additionally, MediaAlpha emphasized its operational momentum and high free cash flow conversion, with a focus on debt repayment. The company also highlighted its strategic partnerships with major Medicare Advantage carriers, underscoring its potential for future growth.
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