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On Friday, TD Cowen’s Lance Vitanza increased the price target for Opera (NASDAQ: NASDAQ:OPRA) shares, pushing it up to $33.00 from the previous $28.00 while retaining a Buy rating for the stock. The new target suggests significant upside from the current price of $19.21. According to InvestingPro analysis, Opera maintains a "GREAT" financial health score of 3.49, and the stock appears undervalued based on their proprietary Fair Value model. Vitanza’s decision follows Opera’s notable fourth-quarter performance, which showcased revenues and EBITDA surpassing expectations, particularly in advertising and Average Revenue Per User (ARPU) growth within lucrative Western markets.
Opera’s financial results for the fourth quarter revealed revenue that not only surpassed the company’s own forecasts but also exceeded the highest estimates set by market analysts. The company has maintained impressive revenue growth of 17.82% over the last twelve months, with total revenue reaching $447.82 million. This success was attributed primarily to a surge in advertising revenue, fueled by e-commerce growth, effective monetization strategies within Opera Ads, and the expansion of the company’s audience extension platform. Additionally, search revenue performed better than anticipated, backed by ongoing expansion in high-ARPU markets and a broader user base in Western regions.
The company’s strategic initiatives have been focused on audience monetization, leveraging artificial intelligence to enhance ad targeting and performance marketing solutions. Opera’s strong financial position, with a current ratio of 2.1 and minimal debt-to-equity ratio of 0.01, provides a solid foundation for these growth initiatives. These efforts have allowed Opera to secure additional advertising spending from key partners, especially in sectors such as e-commerce and travel. The analyst’s commentary highlighted this strategic direction as a crucial factor in the company’s ability to outperform in the advertising domain. For deeper insights into Opera’s financial metrics and growth potential, InvestingPro subscribers can access comprehensive analysis and additional ProTips.
The positive outlook for Opera is also supported by guidance that exceeds revenue estimates, suggesting that future revisions to forecasts could be on the horizon. This is largely due to sustained momentum in advertising, growth in the iOS user base, and continued efforts in audience monetization. The analyst noted that Opera’s scalable and high-margin business model remains robust as the company progresses into 2025.
The raise in the price target to $33 is based on an improved 18x FY26 Free Cash Flow (FCF) forecast for Opera. This adjustment reflects the analyst’s confidence in the company’s continued growth and profitability, cementing Opera’s position as a strong player in the technology and advertising industry.
In other recent news, Opera Limited reported fourth-quarter results that surpassed analyst expectations, with adjusted earnings per share of $0.28 compared to the consensus estimate of $0.25. The company’s revenue for the quarter was $145.83 million, exceeding projections of $137.66 million and marking a 29% year-over-year increase. Advertising revenue, which made up 64% of Opera’s total revenue, grew by 38% year-over-year, reaching $93.3 million, while search revenue rose 17% to $52.3 million. Looking ahead, Opera forecasts first-quarter 2025 revenue between $130 million and $133 million, surpassing the $121.4 million consensus, and full-year 2025 revenue is expected to be between $555 million and $570 million, topping analyst estimates of $547.1 million.
Goldman Sachs analyst Eric Sheridan raised his price target for Opera from $23.00 to $26.00, maintaining a Buy rating. Sheridan noted Opera’s solid revenue momentum, driven by digital advertising opportunities and user growth in high Average Revenue Per User regions. He also highlighted Opera’s strategy of balancing profitable growth with ongoing investments as a means to capitalize on long-term opportunities in digital advertising. Opera’s gaming browser, Opera GX, experienced a 22% year-over-year increase in users, reaching 33.9 million average monthly active users. The company’s adjusted EBITDA rose 19% year-over-year to $33 million in Q4, with a 23% margin, and Opera declared a semi-annual dividend of $0.40 per share, paid in January.
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