Magnite’s Strong Q1 Performance and Strategic Advancements Justify Buy Rating Despite Macroeconomic Caution

Analyst Omar Dessouky from Bank of America Securities reiterated a Buy rating on Magnite (MGNI – Research Report) and decreased the price target to $17.00 from $20.00.

Omar Dessouky’s rating is based on Magnite’s strong financial performance in the first quarter, where the company exceeded revenue expectations with a 12% year-over-year growth, surpassing both guidance and market predictions. The Connected TV (CTV) segment showed robust growth, with a 15% increase driven by strong ad spend, and the Display Video Plus (DV+) segment rebounded with a 9% rise, outperforming initial guidance. Additionally, Magnite’s EBITDA margin of 25% was significantly higher than the anticipated 21%, attributed to both revenue outperformance and reduced computing costs from cloud optimization.
Despite the withdrawal of full-year guidance due to macroeconomic uncertainties, Dessouky views this as a cautious approach rather than a sign of declining business trends. He notes that the transition to programmatic CTV ads is progressing well, and the demand for audience curation is increasing, which could enhance revenue. The upcoming launch of next-gen SpringServe is also expected to boost Magnite’s market share by improving the efficiency of ad transactions. These factors, combined with a de-risked base case, support Dessouky’s Buy rating, even as the price objective is adjusted to $17 due to broader sector re-rating.

In another report released on May 6, Lake Street also maintained a Buy rating on the stock with a $21.00 price target.

Based on the recent corporate insider activity of 102 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of MGNI in relation to earlier this year.