On Wednesday, the technology company Taboola (NASDAQ:TBLA) stock received a positive outlook from B.Riley, as coverage was resumed with a Buy rating and a price target of $5.25. The new price target is based on a projected fiscal year 2024 enterprise value to adjusted EBITDA multiple of 9x.
Taboola is recognized for its content recommendation engine that is utilized by a network of open web publishers including ESPN, CNBC, Business Insider, and The Independent.
Despite challenges in the advertising market affecting Taboola's main sponsored content recommendation business over the past two years, the firm's 30-year partnership with Yahoo is expected to significantly contribute to the company's revenue excluding traffic acquisition costs (TAC), adjusted EBITDA, and free cash flow in fiscal years 2024 and 2025.
The analyst also noted Taboola's AI-driven strategy aimed at improving publisher yields and the potential growth from new e-commerce and revenue streams. Notably, a recent partnership with Apple (NASDAQ:AAPL) could offer additional benefits to the company's financial model for fiscal year 2025.
The report acknowledges the risks associated with the Yahoo partnership, particularly the execution risk for the fiscal year 2024 guidance that has a heavy emphasis on the second half of the year. However, with Taboola's shares trading at approximately 6.5 times the projected fiscal year 2024 EV/adjusted EBITDA, the analyst suggests that the risk/reward profile is favorable.
The anticipated long-term benefits and data advantages stemming from the Yahoo partnership are seen as key factors in this positive assessment.
InvestingPro Insights
Taboola's (NASDAQ:TBLA) financial health and market performance are key indicators for investors. With a market capitalization of $1.42 billion and a challenging P/E ratio of -17.57, the company's value reflects investor sentiment about its future profitability. Despite the negative earnings per share (EPS) over the last twelve months, analysts are optimistic, predicting that Taboola will become profitable this year. This expectation is bolstered by a revenue growth of 13.07% in the last quarter of 2023, signaling potential for future earnings.
One of the standout InvestingPro Tips for Taboola is the high shareholder yield, which is a strong sign of the company's commitment to shareholder value. Additionally, Taboola's liquid assets exceed its short-term obligations, providing financial stability and flexibility. For investors looking for more insights, there are additional InvestingPro Tips available, including an analysis of Taboola's moderate level of debt and its anticipated sales growth in the current year. To explore these insights and more, consider using the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
Taboola's strategic partnerships and AI-driven approach, as highlighted in the article, are critical elements that could drive the company's future success. The positive outlook from analysts, combined with the real-time data and InvestingPro Tips, suggests that Taboola is a company to watch in the technology sector.
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