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On Friday, Needham analysts adjusted their outlook on Shutterstock stock (NYSE: NYSE:SSTK), reducing the price target to $30 from the previous $45, while sustaining a Buy rating on the company’s shares. Currently trading at $20.01, the stock has experienced a significant 59.7% decline over the past year. The revision follows Shutterstock’s earnings report last week, which prompted Needham to moderately decrease their earnings estimates and apply a more significant reduction to their target earnings multiple. InvestingPro analysis reveals 13 additional investment signals that could help investors make more informed decisions about SSTK’s potential.
The analysts have now set the target multiple at approximately 4 times Shutterstock’s estimated adjusted EBITDA for 2025. Despite the significant discount this multiple represents, Needham believes that the less favorable organic content trends observed in the fourth quarter will persist and continue to pressure the valuation multiple. Notably, InvestingPro data shows the company maintains a healthy 57.6% gross profit margin and offers a substantial 6.6% dividend yield, while management has been actively buying back shares.
The Needham team also provided an analysis of Shutterstock’s market position, noting that based on current stock prices for both Shutterstock and Getty Images (NYSE: GETY), Shutterstock appears to be undervalued. According to their estimates, Shutterstock is trading at a 13% discount if the post-merger company is valued at a multiple equal to Shutterstock’s pre-acquisition announcement. The discount deepens to 37% if a blended multiple from before the acquisition announcement is used for valuation. This analysis aligns with InvestingPro’s Fair Value calculations, which suggest the stock is currently undervalued.
This reassessment of Shutterstock’s price target comes as Needham seeks to align the company’s valuation with the latest financial performance and market trends. Despite the reduction in the price target, the firm maintains a positive outlook on the stock, as indicated by the continued Buy rating.
Shutterstock’s recent earnings report and the subsequent analysis by Needham highlight the dynamic nature of stock valuations and the impact of both company performance and broader market conditions on analyst expectations. Investors will likely monitor Shutterstock’s future performance closely to see if the company can address the concerns raised by Needham and improve its organic content trends.
In other recent news, Shutterstock reported record revenues of $251 million for the third quarter of 2024, representing a 7.4% increase year-over-year. This growth was bolstered by the strategic acquisition of Envato, which added $38 million to content revenue. Additionally, the company has raised its full-year revenue guidance to between $935 million and $940 million. Despite these positive developments, Truist Securities downgraded Shutterstock’s stock rating from Buy to Hold, citing concerns over the upcoming merger with Getty Images and the lack of financial guidance for 2025. Needham analysts maintained a Buy rating but adjusted their price target from $55 to $45, acknowledging near-term risks associated with the merger. In related developments, Shutterstock announced a dividend of $0.33 per share, highlighting its ongoing commitment to shareholder returns. The company continues to focus on AI-driven content and strategic acquisitions as key growth drivers.
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