Direct Digital Holdings (DRCT – Research Report), the Technology sector company, was revisited by a Wall Street analyst today. Analyst Darren Aftahi from Roth MKM remains neutral on the stock and has a $9.50 price target.
Darren Aftahi has given his Buy rating for Direct Digital Holdings based on several key factors. The company’s 3rd quarter earnings exceeded expectations with a revenue beat of 68% and an impressive 4th quarter guidance of 80% upside. This was driven by sell-side initiatives materializing earlier than anticipated. Despite the shift towards sell-side in the second half of 2023 and the fiscal year 2024, Aftahi still forecasts high single-digit flow through on incremental revenue to profitability, backed by continued investment. He also highlights the company’s successful partner expansion and wallet share gains, with revenue per advertiser increasing by around 241% year on year in the 3rd quarter.
Aftahi further explains his Buy rating by focusing on the company’s fundamentals. Despite almost doubling its 2024 EBITDA forecast, the stock is still undervalued. He also lauds the company’s exceptional quarter, with 68% revenue beat and 168% year on year growth. The growth of sell-side, deep integration with buying partners, and the rapid go-to-market strategy with its new tech platform were significant contributors to this exceptional performance. Aftahi also believes that the company’s relationship with Amazon will play a larger role in the fiscal year 2024, and despite the company’s existing debt, the improved fundamentals of the business should warrant a greater valuation. Based on these factors, Aftahi has revised his price target for Direct Digital Holdings to $9.50, up from the previous target of $4.75, while maintaining his Buy rating.
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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.
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