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On Friday, Raymond (NSE:RYMD) James analyst Alexander Sklar revised the price target for MeridianLink (NYSE: MLNK) stock, reducing it to $24.00 from the previous $28.00, while maintaining an Outperform rating on the shares. The adjustment comes in the wake of the company’s fourth-quarter results for fiscal year 2024, which demonstrated strong performance despite a challenging mortgage and interest rate landscape. According to InvestingPro data, MLNK currently trades at $18.43, with analysts’ targets ranging from $18 to $24, suggesting potential upside. The stock’s Fair Value analysis indicates it’s currently trading near its intrinsic value.
MeridianLink reported its highest new logo bookings in two years, marking a 40% year-over-year increase. Although the mortgage sector, which is expected to account for approximately 18.5% of the company’s 2025 estimated revenue, is experiencing declines that impact overall growth, Raymond James highlighted the company’s strong execution in other areas, such as sales. InvestingPro data reveals the company maintains a strong gross profit margin of 71.8% and has achieved 4.2% revenue growth in the last twelve months, with analysts forecasting 4% growth for 2025.
The analyst noted that the pressure from downsell is likely abating, as evidenced by the net revenue retention (NRR) expanding by 240 basis points quarter-over-quarter to 101.6%. This metric suggests that existing customers are increasing their spending with MeridianLink, which is a positive sign for the company’s growth prospects. The company’s financial health appears solid, with InvestingPro showing a current ratio of 2.42, indicating strong liquidity to meet short-term obligations. Get access to 7 more exclusive InvestingPro Tips and comprehensive analysis in the Pro Research Report.
Given the current share price, which is trading at roughly 17 times Raymond James’ revised calendar year 2025 unlevered free cash flow estimate, the firm believes that the risk/reward profile for MeridianLink stock remains attractive. They anticipate that there could be an upside to estimates if the company successfully navigates cyclical dynamics or if upcoming investments in go-to-market strategies yield fruitful results.
Furthermore, the stock is expected to find additional support from the company’s share repurchase program. MeridianLink has announced an incremental buyback of approximately $100 million, which represents about 15% of the current float. This buyback initiative could contribute to shareholder value and support the stock price moving forward.
In other recent news, MeridianLink reported its fourth-quarter 2024 earnings, revealing a significant miss on earnings per share (EPS), which came in at -$0.10 against a forecast of $0.08. However, the company managed a slight revenue beat, achieving $79.4 million compared to the anticipated $78.73 million, marking a 7% year-over-year growth. MeridianLink’s full-year revenue reached $316.3 million, up 4% from the previous year, with an adjusted EBITDA of $33.4 million at a 42% margin. Despite the EPS miss, Citi analyst Andrew Schmidt adjusted the price target for MeridianLink shares to $20 from $24, maintaining a Neutral rating. Schmidt noted that MeridianLink’s adjusted EBITDA for the quarter was slightly above expectations, and the company reported strong new logo bookings, including a significant win with an $8 billion asset size bank. The company’s fiscal year 2025 revenue guidance ranges from $326 million to $334 million, with expectations for adjusted EBITDA between $131.5 million and $137.5 million. MeridianLink continues to focus on digital transformation and operational efficiencies, though market conditions for consumer lending remain challenging.
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