Multiple UpgradesIf you were wondering why the SP took off, here's the reason. Snapped up a few more right at the close. GLTA
Verticalscope Holdings Inc. was upgraded by three analysts following a very well-received earnings report this week.
Canaccord Genuity upgraded its rating to “buy” from “speculative buy” while raising its price target to C$10.25 from C$7.25. CIBC upgraded its rating to “outperformer” from “neutral” while raising its target price to C$9 from C$6. And TD Securities upgraded its rating to “action list buy” - its highest recommendation for a stock - from “buy” in raising its price target to C$12 from C$7.5.
Elsewhere, RBC raised its target price to C$14 from C$13; Cormark Securities raised its target to C$9.25 from C$8.25; and Eight Capital raised its target price to C$9 from C$7.
Verticalscope reported stronger-than-expected adjusted EBITDA and free cash flow, which rose 14.6 per cent and 91 per cent, respectively, year over year alongside digital ad growth. The positive results allowed an acceleration of debt being paid off.
Meanwhile, monthly active users rose to 107.7 million in the fourth quarter from 100.5 million in the third quarter.
Canaccord analyst Aravinda Galappatthige said the outlook for the company is now “notably better” in the wake of the fourth quarter results.
“The positive trends through H2/23 and Q4/23 in particular, coupled with fairly clear indications from management of further strength in digital advertising going into Q1/24, suggests a meaningful uptick in the revenue outlook. In Q1/24, we expect the company to return to revenue growth for the first time since Q3/22 (on an organic basis from Q2/22),” Mr. Galappatthige said.
“In addition to the improving ad outlook, a number of other higher-level factors are emerging as tailwinds. First, comments on the call suggest ongoing negotiations with respect to monetizing the depth of FORA’s content in terms of offering access to it to train LLMs [large language models]. There are already reports of sizable deals that have been cut by Reddit on this front (e.g., $60M a year with Google alone). Second, algorithm changes from search engines (led by Google) continue to focus on deprioritizing the mass of AI-generated content piles in favour of authentic perspectives, which certainly assists the company. In fact, we understand that the March 2024 algo changes were the most marked in this respect. Recall that FORA was already benefitting on this front from recent search engine changes, which explains the recent uptick in monthly active users. Third, the retirement of the third-party cookie, which appears to be finally occurring, is also expected to raise the value of the company’s first-party data and access,” the Canaccord analyst said.
Third-party cookies are used principally for web tracking as part of the web advertising ecosystem.