Goldman Sachs lifts DoubleVerify stock target on solid Q2 growth

On Wednesday, Goldman Sachs adjusted its outlook on shares of DoubleVerify Holdings Inc (NYSE: NYSE:DV), a software platform for digital media measurement and analytics. The firm raised the price target to $28.00 from $25.00, while reiterating a Buy rating on the stock.

The adjustment follows DoubleVerify's second-quarter earnings report for 2024, which the firm described as a strong performance, highlighting re-accelerated revenue growth. This growth was primarily driven by the company's social and Connected TV (CTV) segments.

Despite facing headwinds from a consistent group of six retail and Consumer Packaged Goods (CPG) advertisers, the impact of these advertisers remained stable quarter over quarter.

Management's outlook for DoubleVerify was characterized as generally positive, particularly with respect to the business landscape for the second half of 2024. Goldman Sachs anticipates that the company's efforts to continue revenue growth and maintain stable to rising margins will be key to regaining investor trust and prompting upward revisions to estimates and valuation multiples.

Looking further ahead, Goldman Sachs remains optimistic about DoubleVerify's long-term prospects within the digital advertising sector.

The firm cited several secular trends that could benefit the company, including the increasing share of digital in total media spend and engagement, the growing emphasis on brand safety, fraud prevention, and content moderation, the expansion into fast-growing digital channels like short-form video and retail media, and the broader adoption of artificial intelligence in digital advertising.

These factors underpin the firm's decision to maintain a Buy rating and increase the price target for DoubleVerify shares.

In other recent news, DoubleVerify Holdings Inc. has been the subject of a flurry of analyst adjustments and significant company actions. Piper Sandler reaffirmed its Overweight rating on the company, maintaining a positive outlook amidst discussions about the company's future growth and valuation.

Contrarily, Morgan Stanley downgraded DoubleVerify's stock from Overweight to Equalweight and reduced the price target to $21, following first-quarter results that fell short of expectations.

DoubleVerify also initiated a new stock repurchase program, planning to repurchase up to $150 million of its outstanding common stock, reflecting its current financial strength and dedication to shareholder value.

Despite exceeding its revenue and adjusted EBITDA guidance in the first quarter, the company's 2024 outlook is impacted by reduced spending from legacy retail and consumer packaged goods customers and a shift in advertising spend towards social media and connected TV platforms.

BMO Capital Markets reduced its price target for DoubleVerify to $38.00 but maintained an Outperform rating. BofA Securities, however, downgraded the company from Buy to Underperform, lowering the price target to $18.

These changes, along with others from firms like Stifel, represent a range of sentiments about DoubleVerify's prospects in the evolving digital advertising landscape. These are among the recent developments for DoubleVerify.

InvestingPro Insights

Goldman Sachs' positive stance on DoubleVerify Holdings Inc (NYSE: DV) is further supported by key financial metrics and market performance data. With a market capitalization of $3.71 billion, DoubleVerify exhibits a robust financial position. Notably, the company's gross profit margin stands at an impressive 81.5% for the last twelve months as of Q1 2024, underscoring its efficiency in controlling costs relative to revenue.

In the short term, DoubleVerify's stock has seen significant volatility. While the stock has achieved a considerable return over the last week, with a 9.49% price total return, it has also experienced a notable decline over the last three months and six months, with price total returns of -26.35% and -46.06% respectively. This reflects a mixed sentiment in the market, which investors should consider when evaluating the stock's near-term prospects.

Moreover, DoubleVerify is trading at a high earnings multiple, with a P/E ratio of 53.79 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 55.75. While this may suggest a premium valuation, investors should also consider the company's revenue growth and the quality of its earnings.

For those looking to delve deeper into DoubleVerify's financial health and future prospects, there are more InvestingPro Tips available, including insights on cash flow, liquidity, and valuation multiples. To explore further, visit Investing.com/pro/DV and use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.

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