On Tuesday, Needham analysts adjusted their stance on Zeta Global Holdings Corp (NYSE: ZETA), maintaining a Buy rating but reducing the price target from $25 to $20. The revision reflects a broader recalibration in software valuations, coming after the stock’s 37% decline over the past six months. The new price target is set despite a recent downturn in the sector, with the firm highlighting Zeta Global’s unique position and diversified customer base as key factors underpinning their positive outlook. According to InvestingPro data, the company maintains strong financial health with a current ratio of 3.33, indicating robust liquidity.
The analysts’ endorsement of Zeta Global is based on seven specific criteria. These include the company’s distinctive platform offerings and a broad spectrum of clients, alongside strategic investments aimed at bolstering revenue growth by the fiscal year 2028. The company’s impressive revenue growth of 40% in the last twelve months supports this outlook. Additionally, the company is expected to see significant improvements in free cash flow (FCF) conversion and is on the cusp of achieving GAAP operating profitability. InvestingPro analysis reveals several more key insights about Zeta’s growth trajectory and financial health, available in the comprehensive Pro Research Report.
Needham’s analysis suggests that Zeta Global’s current valuation is highly attractive, trading at approximately 2.3 times its total fiscal year 2026 revenues. This is deemed favorable when compared to a sum-of-the-parts valuation, which could justify a 6 times multiple on recurring revenues. According to Needham, such a valuation could lead to a total company valuation that far exceeds the newly set $20 price target in a normalized market. The company’s strong gross profit margin of 60% and healthy Altman Z-Score of 4.5 further support this valuation perspective.
The firm’s confidence in Zeta Global is further bolstered by the company’s ongoing efforts to improve profitability. The analysts underscore that the organization is on track to reach GAAP operating profitability soon, a milestone that could enhance investor confidence in the company’s financial health and growth trajectory.
In conclusion, Needham’s updated coverage on Zeta Global Holdings Corp comes with a positive outlook, despite a reduction in the price target. The firm’s analysis underscores the company’s potential for growth and profitability, suggesting that the current stock price could present an attractive entry point for investors.
In other recent news, Zeta Global reported its Q1 2025 earnings, revealing a mixed financial performance. The company achieved a revenue of $264 million, surpassing the forecast of $254.43 million, marking a 36% year-over-year increase. However, earnings per share (EPS) missed expectations, recording -0.1 against the projected 0.12. This discrepancy in EPS has raised concerns about profitability management despite strong revenue growth. KeyBanc analysts maintained a Sector Weight rating for Zeta Global, citing a neutral stance on the company’s stock following the earnings call. CEO David Steinberg indicated potential acquisition interest in Zeta Global, although no formal offers have been disclosed. Additionally, the company announced the retirement of co-founder John Sculley from the board, who will continue as Vice Chairman Emeritus. Despite these developments, Zeta Global continues to focus on its AI-driven solutions, which have been pivotal in driving revenue growth.
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