On Monday, VIZIO Holding Corp (NYSE:VZIO) experienced a change in stock rating as Guggenheim downgraded the company from Buy to Neutral. This shift comes despite VIZIO's fourth-quarter results surpassing expectations, particularly in its Platform+ net revenue, which exceeded management's guidance.
The company's gross profit also beat forecasts, benefiting from a significant 36% year-over-year increase in advertising growth. VIZIO reported a notable rise in new advertising partners, with a 32% year-over-year growth.
The Media and Entertainment (M&E) revenue segment, which faced challenges throughout 2023, showed signs of recovery with an approximate 20% year-over-year growth. However, the company's device revenue and gross profit continue to face headwinds. VIZIO has been actively subsidizing costs to support the growth of its Platform+ service.
Despite the positive performance in certain areas, Guggenheim's decision to downgrade the stock comes as VIZIO approaches its pending acquisition by Walmart (NYSE:WMT). The analyst from Guggenheim has removed the price target for VIZIO shares as they near the transaction price of $11.50. It is important to note that VIZIO did not conduct an earnings call in light of the ongoing acquisition process.
Investors may find the downgrade an indication of the changing landscape for VIZIO as it transitions through the acquisition. The company's focus on Platform+ growth, while yielding positive results in advertising revenue, seems to be balanced against the challenges faced in device sales and profitability.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.