Investors of ad technology company PubMatic (PUBM) have seen better days. The company’s shares fell 21% this week, after announcing its Q4- and FY22 earnings, setting some disappointing guidance for Q1. The cloud-based company’s stock is now sitting 64% lower than this time one year ago.
PubMatic saw fourth-quarter revenue come out to $75.56 million, in line with the Street estimate. EBITDA rolled in at $38.9 million, with an all-time high margin of 51%, and a solid 31% above consensus. However, the next quarter has management cautiously guiding for $53-55 million in revenue, while the Street had given them more credit, expecting over $56 million.
Looking to the full year ahead, management raised revenue forecast to $282-286 million, in line with consensus estimates. The rise in FY22 revenue estimates set against low Q1 projections shows that PUBM is “implying some mix-shift in growth trends to the back-half of this year,” according to 5-star analyst Shweta Khajuria of Evercore ISI. The company projects adjusted EBITDA for FY22 $101-106 million, suggesting 36-37% margins, a jump up from the previous 30%.
PUBM plans to invest in growth around addressability, Supply Path Optimization (SPO) tools, retail media, and Connected TV. Khajuria sees the company’s “growth investments as a positive, given the company’s large long-term opportunity.” The analyst views the agenda as “an offensive step to drive further growth while generating very healthy EBITDA and FCF.”
Khajuria is quite bullish about the company’s prospects despite the low Q1 forecast, dismissing what she views as “transitory” pandemic headwinds, with “certain verticals like food & drinks, arts & entertainment, and fitness” remaining impacted by the Omicron variant.
All in all, Khajuria gives PubMatic stock an Outperform (i.e. Buy) rating, although she lowered her price target from $50 to $40. Nonetheless, the new figure implies ~64% upside from current levels. (To watch Khajuria’s track record, click here)
The Street is in full agreement on this one. Based on Buys only – 7, in total – the stock has a Strong Buy consensus rating. Khajuria’s forecast appears on the conservative side; going by the $45.57 average target, the shares will be changing hands for ~87% premium a year from now. (See PUBM stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
