Citi analyst Ygal Arounian reiterated a Hold rating on Outbrain (OB – Research Report) yesterday and set a price target of $3.90.
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Ygal Arounian’s rating is based on a combination of factors, primarily focusing on Outbrain’s integration progress and macroeconomic conditions. The company’s recent quarterly results were slightly ahead of expectations, and the integration process is on track, with management executing well on cost synergies. However, the adjusted EBITDA for the second quarter was below Street estimates, although it aligned with management’s prior expectations due to the back half-weighted nature of the cost synergies.
Despite the positive integration progress, Arounian remains cautious due to macroeconomic uncertainties. The target price was slightly lowered, reflecting a need for more clarity in the macro environment to support the merger integration’s cost and revenue synergies in the coming quarters. While there is confidence in achieving the adjusted EBITDA target, potential risks from a downturn in the advertising macro environment are being closely monitored. Therefore, the Hold rating reflects a balanced view of the current positive integration steps and the need for caution amid uncertain macroeconomic conditions.