Digital Turbine (APPS – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Omar Dessouky from Bank of America Securities remains neutral on the stock and has a $6.00 price target.
Omar Dessouky has given his Hold rating to Digital Turbine’s stock due to a combination of factors. The 2FQ revenue of $143 million was at the low end of guidance and below the expectations of both the Street and the Bank of America, and although EBITDA of $28 million exceeded expectations, the AGP segment fell short. Furthermore, the exit of legacy long-tail publishers due to platform consolidation negatively impacted revenue. However, the US Revenue per Device saw an improvement, balancing out the weakness in device activations. Management anticipates that the integration of platforms will be fully accomplished by FY24.
Dessouky’s rating also took into account the 3FQ guide of $144-150 million, which is well below the Street’s expectation of $162 million. This conservative outlook reflects potential challenges during the holiday season device sales in the US, along with some softness in brand advertising dollars due to the recent Mideast conflict. Although management does not foresee any significant impact from this conflict on operations, the 3FQ outlook suggests that a gradual turnaround in 2FQ24 is unlikely. Dessouky lowered his FY24/FY25 forecasts, now expecting a gradual recovery to start in FY25. Despite the fact that the stock is trading at a discount valuation compared to most other AdTech platforms, Dessouky believes that it is too early for investors to endorse the growth thesis until there is evidence of successful execution in 2024.
Dessouky covers the Technology sector, focusing on stocks such as AppLovin, Electronic Arts, and Digital Turbine. According to TipRanks, Dessouky has an average return of -12.1% and a 20.59% success rate on recommended stocks.
In another report released on November 1, Roth MKM also maintained a Hold rating on the stock with a $6.00 price target.
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Digital Turbine (APPS) Company Description:
Digital Turbine, Inc. engages in the innovation of media and mobile communications which helps to deliver an end-to-end platform solution for mobile operators, application developers, device original equipment manufacturers (OEM), and other third parties. It operates through the Advertising segment, which is comprised of Operator and OEM (O&O) business. The O&O is an advertiser solution for unique and exclusive carrier and OEM inventory. The company was founded on November 6, 1998 and is headquartered in Austin, TX.
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