Riskified stock price target lowered to $5 by UBS on margin concerns

Investing.com - UBS lowered its price target on Riskified Ltd. (NYSE:RSKD) to $5.00 from $5.75 on Tuesday, while maintaining a Neutral rating on the fraud prevention company’s stock. Currently trading at $4.43, the stock sits below the analyst consensus range of $4.50-$8.00. According to InvestingPro analysis, Riskified appears undervalued based on its Fair Value assessment.

The price target reduction follows Riskified’s second-quarter results, which exceeded analyst expectations for gross merchandise volume (GMV), revenue, and EBITDA. However, gross profit came in approximately 2% below Street estimates, with gross profit margin at about 50% compared to the 51% expected and 53% achieved in the same quarter last year. InvestingPro data shows the company maintains strong financial health with a current ratio of 6.24, indicating robust liquidity management.

UBS attributed the margin softness primarily to Riskified’s expansion into emerging verticals such as Money Transfer and Payments, along with growth in new geographic markets like Other Americas. These headwinds were partially offset by improvements in core machine learning models and continued strong performance in new product revenue, which grew well over 100% year-over-year in the second quarter. Despite recent challenges, with the stock down 13.65% over the past week, InvestingPro subscribers can access 8 additional key insights about Riskified’s growth potential and financial outlook.

Riskified has increased the lower end of its full-year 2025 revenue guidance to $336-346 million, up from $333-346 million previously, while maintaining its Adjusted EBITDA forecast of $18-26 million. The company now expects its full-year gross profit margin to be at the low end of its previously stated range at approximately 52%, compared to the earlier guidance of 52-53.5%.

UBS expects Riskified’s continued calibration of machine learning models to drive margin improvement in the second half of the year, with management already observing positive indicators and maintaining its outlook for the remainder of 2025.

In other recent news, Riskified Ltd reported its second-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.02, compared to the forecasted -$0.06. The company also exceeded revenue projections, reporting $81.1 million against an anticipated $79.99 million. Despite the positive earnings and revenue results, Riskified’s stock experienced a premarket decline. Following these earnings, Keefe, Bruyette & Woods adjusted their price target for Riskified to $5.25, maintaining a Market Perform rating. DA Davidson also lowered its price target to $6.00, while keeping a Buy rating, citing growth concerns despite the revenue and adjusted EBITDA outperformance. These developments highlight recent analyst adjustments and the company’s earnings performance.

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