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Investing.com - RBC Capital lowered its price target on PubMatic Inc (NASDAQ:PUBM) to $11.00 from $14.00 on Tuesday, while maintaining an Outperform rating on the stock. The stock, currently trading at $8.18, has experienced significant volatility, dropping over 9% in the past week and trading at a P/E ratio of 71.75.
The price target reduction follows what RBC described as "a solid quarter" for PubMatic, with revenue and adjusted EBITDA exceeding the high end of guidance. According to InvestingPro analysis, the company maintains strong financial health with more cash than debt and liquid assets exceeding short-term obligations.
RBC noted that as previous DSP (demand-side platform) headwinds dissipated, a new challenge emerged that created pressure on revenue and adjusted EBITDA guidance.
According to RBC, the new headwind stems from a platform change at a DSP that altered how it evaluates inventory, resulting in reduced spending on PubMatic’s platform.
RBC expects PubMatic stock to "remain range bound near-term" as management works to address these challenges, with investor attention likely shifting to Google (NASDAQ:GOOGL) remedies expected in September.
In other recent news, PubMatic Inc has faced a series of adjustments in analyst price targets due to mixed financial results and guidance. The company recently exceeded expectations in its second-quarter 2025 results for both revenue and EBITDA, but its third-quarter revenue guidance fell approximately 10% below consensus, as noted by JMP Securities. This prompted JMP to lower its price target from $16.00 to $12.00, though it maintained a Market Outperform rating. Similarly, Wolfe Research reduced its price target from $15.00 to $10.00, citing challenges with demand-side platforms, while highlighting PubMatic’s strong balance sheet and positive cash flow.
Jefferies also lowered its price target to $10.00 from $12.00, maintaining a Hold rating due to the weaker third-quarter guidance. Scotiabank (TSX:BNS) followed suit, cutting its price target from $15.00 to $10.00, while keeping a Sector Perform rating, as the disappointing guidance overshadowed modest earnings beats. Lake Street Capital Markets maintained its Hold rating with a price target of $9.50, reflecting a steady outlook amid the mixed financial signals. These developments indicate that while PubMatic has shown some financial strength, concerns over future performance and guidance adjustments have influenced analyst perspectives.
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