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Investing.com - Canaccord Genuity downgraded VerticalScope Holdings Inc (NYSE:BRFS) from "Spec. Buy" to "Hold" and lowered its price target to C$4.25 from C$6.50, citing concerns over declining user metrics.
The research firm pointed to VerticalScope’s third-quarter results, which showed a sharp decline in monthly active users (MAUs), falling 31.9% year-over-year despite some positive EBITDA performance due to cost management initiatives.
Canaccord noted that while management reported improved traffic in October and an increasing mix of direct traffic, the firm sees "risk and volatility in terms of MAU movement in the near term" that could translate to continued pressure on programmatic advertising sales.
On a positive note, the company’s direct advertising business is holding steady, and VerticalScope continues discussions with potential partners regarding data licensing opportunities, according to the research note.
Despite acknowledging VerticalScope’s attractive valuation with a free cash flow yield exceeding 20%, Canaccord moved to the sidelines due to uncertainty around user metrics and their impact on revenue growth.
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