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Investing.com - JMP Securities lowered its price target on PubMatic Inc (NASDAQ:PUBM) to $12.00 from $16.00 on Tuesday, while maintaining a Market Outperform rating on the stock. The company, currently trading at $10.57, has seen its shares decline by over 38% in the past six months, though InvestingPro analysis suggests the stock is trading below its Fair Value.
The price target reduction follows PubMatic’s second-quarter 2025 results, which exceeded the high-end of guidance for both revenue and EBITDA. With trailing twelve-month revenue of $288.38M and a healthy gross margin of 65%, the company has demonstrated operational strength. Despite the strong performance, the company faces headwinds from a major demand-side platform (DSP) partner that led to third-quarter revenue guidance approximately 10% below consensus. InvestingPro data reveals that four analysts have recently revised their earnings estimates downward for the upcoming period.
JMP believes the DSP partner in question is The Trade Desk (NASDAQ:TTD) and attributes the challenges to its transition from the Solimar platform to Kokai. This platform change has altered how the partner values inventory, creating temporary disruption for PubMatic. Notably, InvestingPro analysis shows the company maintains strong financial health with more cash than debt on its balance sheet, suggesting resilience during this transitional period.
PubMatic management expressed confidence in its ability to mitigate these impacts but acknowledged it would take time to optimize the inventory it sends to this partner. The company continues to make progress in connected TV (CTV), data, and supply path optimization (SPO).
JMP also highlighted a potential opportunity stemming from Google’s (NASDAQ:GOOGL) antitrust ruling, noting that PubMatic could gain market share as structural changes to Google’s publisher tools and ad auction are implemented, with each point of share gained potentially representing $50-75 million in revenue.
In other recent news, PubMatic Inc. reported its second-quarter 2025 earnings, which showed a revenue increase, surpassing expectations with $71.1 million against a forecast of $67.84 million. Despite this positive revenue growth, the earnings per share (EPS) fell short, posting $0.05 compared to an expected -$0.16. This earnings report led to a decline in the company’s stock price. Following these results, B.Riley downgraded PubMatic from Buy to Neutral, citing issues with DSP partners and adjusting its price target to $9.00 from $17.00. Wolfe Research also lowered its price target for PubMatic to $10.00 from $15.00, maintaining an Outperform rating and highlighting the company’s healthy balance sheet and positive free cash flow. Jefferies joined in adjusting its price target to $10.00 from $12.00, maintaining a Hold rating due to weaker third-quarter revenue guidance. These developments reflect the challenges PubMatic faces despite its strong second-quarter performance.
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