In a report released today, Laura Martin from Needham maintained a Buy rating on Stagwell (STGW – Research Report), with a price target of $6.36.
Laura Martin’s rating is based on several positive indicators for Stagwell’s future performance. One of the key reasons for the Buy rating is the record new business wins amounting to $130 million in the first quarter of 2025, which is expected to contribute significantly to year-over-year revenue growth. Additionally, the increase in spending from major technology clients by 18% year-over-year, largely driven by projects related to generative AI, highlights a strong demand for Stagwell’s services in this sector.
Another factor supporting the Buy rating is the impressive growth in Stagwell Marketing Cloud’s revenues, which rose by 45% year-over-year, excluding advocacy. Despite a decline in adjusted EBITDA and EPS, the company’s adjusted EBITDA margins improved by 50 basis points year-over-year, reaching 14.3%. Without the investment in Stagwell Marketing Cloud, the margins would have been even higher at 17.3%, indicating strong underlying profitability. These factors collectively suggest a promising outlook for Stagwell, justifying the Buy recommendation.
In another report released on May 6, Benchmark Co. also maintained a Buy rating on the stock with a $9.50 price target.