Outbrain stock target lifted to $10 by JMP Securities

On Tuesday, Outbrain Inc (NASDAQ:OB) received a positive assessment from JMP Securities as the firm raised its price target on the company’s shares. The new price target is set at $10.00, up from the previous $7.00, while the Market Outperform rating remains unchanged. According to InvestingPro data, analyst targets now range from $5.50 to $10.00, with two analysts recently revising their earnings expectations upward for the upcoming period.

The increase in the price target follows Outbrain’s recent announcement regarding its merger with Teads. While the stock has seen a 43% gain over the past year, recent performance shows a 7.75% decline in the past week. Outbrain has revised its expected total synergies from the merger, now estimating them to be between $65 million and $75 million. This is an increase of $15 million from their earlier mid-point estimate.

The digital recommendation platform expects to realize $45 million of these synergies in 2026. This will primarily come from a reduction in the workforce across the organization, with approximately 70% of the reduction in force (RIF) anticipated to occur in the first month following the merger’s closing.

JMP Securities’ analyst highlighted the enhanced synergy expectations as a key factor in the decision to raise the price target. Outbrain’s strategic move to merge with Teads is seen as a significant step that could streamline operations and bolster financial performance in the long term.

Investors and market watchers will likely keep a close eye on Outbrain’s progress as it integrates Teads and aims to capitalize on the expected financial benefits from the merger. With an overall Financial Health Score of "GOOD" from InvestingPro, and the company’s next earnings report due on February 27, the raised price target reflects confidence in Outbrain’s ability to execute its post-merger strategy and achieve the projected cost savings.

In other recent news, Outbrain Inc. has initiated a private offering of senior secured notes, aiming to raise $625 million. This action is primarily to refinance existing debt related to the company’s impending acquisition of TEADS, a Luxembourg-based private company. The acquisition, expected to enhance Outbrain’s service offerings and create new revenue opportunities, is set to close in the first quarter of 2025. Analyst firm Needham has increased its price target for Outbrain from $6.00 to $9.00, maintaining a Buy rating on the stock, in anticipation of this acquisition. Alternatively, Citi has adjusted its outlook on Outbrain, reducing the price target to $5.30 from the previous $5.50 but maintaining a Neutral rating on the stock. Outbrain’s third-quarter results for 2024 aligned with expectations, with adjusted EBITDA notably better than anticipated. These are recent developments in the company’s operations and financial performance.

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