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On Monday, Morgan Stanley (NYSE:MS) adjusted its stance on LiveRamp Holdings Inc. (NYSE: NYSE:RAMP) shares, downgrading the company's stock rating from Overweight to Equalweight. The firm's analyst, Elizabeth Porter, maintained a price target of $35.00 for the stock. According to InvestingPro data, LiveRamp maintains a "GOOD" financial health score, with strong liquidity ratios and a solid balance sheet showing more cash than debt.
The decision to downgrade LiveRamp's stock rating was based on a few key observations. Morgan Stanley noted the absence of strong catalysts that could potentially speed up growth and enhance investor sentiment. The firm highlighted that while the stock's valuation is not demanding, the prospects for a near-term resurgence in fundamentals are dim. Current metrics from InvestingPro show the stock trading at elevated multiples, with a P/E ratio over 680x, though analysts expect net income growth this year.
According to Morgan Stanley, several factors contribute to this outlook. Firstly, the phasing out of third-party cookies is expected to slow down the rate of new customer acquisition and limit the expansion of use cases for LiveRamp's services. Secondly, the benefits from the acquisition of Habu, a privacy-focused data collaboration firm, have not met initial expectations.
Lastly, a year-over-year decline in net new Annual Recurring Revenue (ARR), Remaining Performance Obligations (RPO), and Current Remaining Performance Obligations (CRPO) has tempered the firm's expectations for a near-term revenue boost. However, InvestingPro data reveals the company achieved 13.8% revenue growth in the last twelve months, with additional financial metrics and insights available in the comprehensive Pro Research Report.
Despite the downgrade, Morgan Stanley's price target suggests a roughly 19% upside from the current level, indicating a belief in the stock's potential for growth, albeit at a more modest pace than previously anticipated. The unchanged price target of $35.00 reflects these adjusted expectations for LiveRamp's performance in the near future. For deeper insights into LiveRamp's valuation and growth prospects, investors can access detailed analysis and 11 additional ProTips through InvestingPro's comprehensive research platform.
In other recent news, LiveRamp Holdings, Inc. reported significant top line growth, client progress, and margin improvement in its fiscal 2025 second quarter earnings call. The company's CEO, Scott Howe, and CFO, Lauren Dillard, emphasized these positive aspects while also reminding investors of potential risks that could impact future results. Despite these cautionary statements, LiveRamp demonstrated optimism about its performance and future prospects.
There were no specific misses mentioned in the summary of the call, and the company reported strong performance metrics. The earnings call was also accompanied by a press release and a slide deck, both available on LiveRamp's investor relations website. The company's recent developments indicate a positive outlook, but investors are reminded that forward-looking statements are subject to risks and uncertainties.
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