Direct Digital Holdings (DRCT – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Darren Aftahi from Roth MKM remains neutral on the stock and has a $12.50 price target.
Darren Aftahi has given his Buy rating due to a combination of factors, primarily focused on Direct Digital Holdings’ potential for increased margins and the company’s strategic shift toward more profitable direct deals. He believes that by moving away from BidSwitch and forming direct deals with partners, DRCT can significantly enhance its margins by approximately 200-500 basis points, which would directly benefit the company’s bottom line.
Aftahi’s reassessment of Direct Digital Holdings also takes into account the company’s superior top-line growth when compared to its peers, as well as the potential for a long-term improvement in adjusted EBITDA margins. Despite not altering any current financial figures, his analysis suggests that achieving mid-range margin improvements could result in an $8.4 million enhancement in adjusted EBITDA for 2024, equating to a 42% benefit. Considering these factors, along with DRCT’s projected 40% two-year compound annual growth rate in adjusted EBITDA, Aftahi has re-evaluated the multiple applied to DRCT shares, resulting in a new price target of $12.50, up from the previous $9.50.
Aftahi covers the Technology sector, focusing on stocks such as Shopify, Alarm, and Digital Turbine. According to TipRanks, Aftahi has an average return of 8.6% and a 35.80% success rate on recommended stocks.
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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.
Read More on DRCT:
- Direct Digital price target raised to $9.50 from $4.75 at Roth MKM
- Direct Digital reports Q4 EPS 23c, consensus 5c
- Direct Digital Holdings Reports Third Quarter 2023 Financial Results
- Direct Digital price target lowered to $4.75 from $5.25 at Roth MKM
- Direct Digital appoints Diana Diaz as pemanent CFO
