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On Thursday, Needham maintained a positive outlook on Ibotta Inc (NYSE: IBTA), increasing the company’s price target from $60.00 to $70.00 while reaffirming a Buy rating. The revision comes in response to Ibotta’s first-quarter earnings, which surpassed expectations. According to InvestingPro data, the company maintains a "GREAT" financial health score, with the stock currently trading at $50.13.
Analysts at Needham highlighted Ibotta’s strategic shift in its advertising model as a key factor for the price target adjustment. The company is moving away from return on advertising spend (ROAS) metrics towards a focus on cost per incremental purchase (CPID). The initial results from this transition have been promising, with two consumer packaged goods (CPG) advertisers doubling and octupling their spending compared to last year’s first half. The company’s impressive gross profit margin of 84.66% suggests strong operational efficiency in its business model.
The report further noted that three additional clients have signed on to join the CPID testing phase. This expansion indicates a growing interest in Ibotta’s new advertising strategy and suggests potential for increased revenue, building on the company’s current 7.2% revenue growth rate.
Needham’s analysis suggests that while 2025 may be focused on establishing the new advertising processes, these developments are expected to pave the way for Ibotta’s success in the following year. The firm anticipates that the adoption of CPID will lead to revenue acceleration and allow Ibotta to leverage its high incremental margins effectively. For deeper insights into Ibotta’s financial metrics and growth potential, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company’s valuation and growth prospects.
In the words of the Needham analyst, "Overall, we think these data points show CPID is showing encouraging signs early and while ’25E will likely be about getting the processes in place, it should set up IBTA for success in ’26E and beyond with revenue acceleration allowing the company to benefit from their structurally high incremental margins."
In other recent news, Ibotta Inc reported its first-quarter 2025 earnings, revealing a revenue of $84.6 million, which marks a 3% year-over-year increase. The company’s earnings per share (EPS) were $0.36, falling short of the forecasted $0.42. Despite this, Ibotta’s revenue exceeded consensus estimates by 3%, and its EBITDA surpassed expectations by approximately 20%. Goldman Sachs raised its price target for Ibotta to $65, maintaining a Buy rating, while Evercore ISI also increased its price target to $65, up from $56, endorsing an Outperform rating. Citizens JMP reiterated a Market Outperform rating with a $58 price target, reflecting confidence in Ibotta’s growth trajectory. Ibotta’s strategic focus on Cost Per Incremental Dollar (CPID) based campaigns has shown early positive results, leading to increased spending by initial clients and attracting new CPG companies for testing. The company’s expansion of strategic partnerships with platforms like Instacart (NASDAQ:CART) and DoorDash (NASDAQ:DASH) further supports its growth potential, as noted by analysts.
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