Needham analyst Laura Martin maintained a Buy rating on Outbrain (OB – Research Report) today and set a price target of $5.50.
Laura Martin has given her Buy rating due to a combination of factors including Outbrain’s strong performance in terms of profit and free cash flow, which exceeded expectations for the first quarter of 2024. Despite net revenues being flat year-over-year and slightly below estimates, Outbrain’s adjusted EBITDA saw a remarkable year-over-year increase, indicating robust profit growth. The company also managed to reduce operating expenses, which reflects efficient cost management and contributes to its financial health.
Additionally, the report highlights several positive aspects of Outbrain’s business, such as significant revenue from brands and agencies, the adoption of their Creative AI tools by a notable fraction of customers, and a high utilization rate of their automated bidding tools for ad spending. Outbrain also showed strong customer retention rates and stable pricing for the majority of the quarter. These factors, collectively, suggest a solid underlying business strength and the potential for continued growth, thus justifying a Buy rating for the stock.
In another report released yesterday, JMP Securities also maintained a Buy rating on the stock with a $7.00 price target.
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Outbrain (OB) Company Description:
Outbrain Inc is a platform powering the open web that matches audiences with personalized content and ads, driving quality engagement. Its platform delivers ads to end-users that appear as links to articles, products, and videos on media partners’ sites. It derives revenue primarily from advertisers through user engagement with the ads that it places on media partners’ web pages and mobile applications. The company generates the vast majority of its revenues from Europe, the Middle East, and Africa followed by the USA and others.
