Needham starts Amplitude stock with Buy, sets $16 price target

On Monday, Needham analysts began coverage on Amplitude Inc (NASDAQ:AMPL), a digital optimization company, assigning a Buy rating and setting a price target of $16.00. The new rating reflects a positive outlook on the company’s potential for revenue growth and the expansion of its platform. According to InvestingPro data, the company has demonstrated strong momentum with a 46.74% price return over the past six months.

Amplitude’s stock is considered by Needham to be particularly attractive at the current moment, more so than at any previous point in the company’s history. The optimism is based on the belief that Amplitude has effectively navigated through client turnover issues that arose from the zero interest rate policy (ZIRP) and the temporary increase in spending during the Covid-19 pandemic. The company maintains a healthy financial position with a current ratio of 2.1 and holds more cash than debt on its balance sheet.

Analysts at Needham anticipate that Amplitude’s revenue growth rate will experience a multi-year acceleration. This projection is supported by the company’s development of a robust platform that is beginning to access new budget areas. This expansion is expected to enhance customer retention and increase net dollar retention rates (NDRR).

Needham’s analysis suggests that the market is currently undervaluing Amplitude’s growing platform strategy. This strategy has allowed the company to target a large total addressable market (TAM) estimated at $50 billion. Analysts believe that this market size can sustain prolonged growth as businesses continue to seek improvements in the digital experience offered to their customers.

At present, Amplitude’s shares are trading at approximately 3.9 times Needham’s forecast for the company’s fiscal year 2026 revenue. The $16.00 price target is based on a valuation of 5.2 times the estimated revenue, grounded in Needham’s growth and profitability projections for Amplitude.

In other recent news, Amplitude Inc. reported its fourth-quarter 2024 earnings, surpassing expectations with an earnings per share (EPS) of $0.02, exceeding the forecast of $0.01. The company’s revenue for the quarter reached $78.1 million, above the anticipated $76.56 million, demonstrating a strong performance and a 9% year-over-year increase. Amplitude also provided an optimistic outlook for 2025, with revenue guidance set between $325 million and $331 million, indicating a projected 10% growth. KeyBanc Capital Markets and Baird both adjusted their ratings and price targets for Amplitude, with KeyBanc raising its target to $17.00 while maintaining an Overweight rating, and Baird upgrading the stock to "Outperform" and increasing the price target from $12.00 to $17.00. DA Davidson also upgraded Amplitude’s stock from Neutral to Buy, citing the company’s strong enterprise momentum and raising the price target to $16.00. Additionally, Amplitude announced the appointment of Tien Tzuo, a seasoned executive with extensive experience in enterprise software, to its Board of Directors. These developments reflect the company’s strategic initiatives and strong market position, which have garnered positive attention from analysts.

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