Roth MKM analyst Darren Aftahi maintained a Buy rating on Direct Digital Holdings (DRCT – Research Report) today and set a price target of $4.75.
Darren Aftahi has given his Buy rating to Direct Digital Holdings due to a variety of reasons. One of the key drivers is the robust top-line growth of 34% that the company has showcased, despite some margin compression caused by a stronger sell-side mix and publisher expansion. Aftahi also notes that the revenue and adjusted EBITDA expectations for 3Q23 are higher than consensus estimates, indicating a healthy financial position. However, he is cognizant of the limited cash balance following a significant warrant repurchase, which might limit near-term growth prospects.
The analyst has also taken into consideration the company’s strategic move of working with larger publishers to expand its reach, even though it has led to a year-on-year margin compression. Furthermore, it is noted that the company’s Cash Operational Expenses are expected to decrease slightly, which should help to offset lower margins. Aftahi also mentions the repurchase of a large portion of outstanding warrants, which has impacted the cash balance. Despite this, he believes that the cash balance could be a key discussion point for the second half of 2023 and early 2024, considering the outstanding debt balance. He concludes by adjusting the price target to $4.75, which is in line with the company’s peer group.
See today’s best-performing stocks on TipRanks >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
Direct Digital Holdings (DRCT) Company Description:
Direct Digital Holdings Inc is an end-to-end, full-service programmatic advertising platform primarily focused on providing advertising technology, data-driven campaign optimization and other solutions to underserved and less efficient markets on both the buy- and sell-side of the digital advertising ecosystem.
Read More on DRCT:
