Loop Capital is bullish on Integral Ad Science stock and confident in FY24 revenue prospects

Loop Capital initiated coverage on Integral Ad Science Holding Corp (NASDAQ:IAS) stock on Tuesday with a Buy rating and a $15.00 price target. The company cited the company's history of beating revenue guidance and its realistic fiscal 2024 (FY24) revenue outlook as reasons for the positive rating.

Integral Ad Science has exceeded the top end of its revenue guidance for 11 consecutive quarters since becoming a public entity. The company has only lowered previously issued fiscal year guidance once in nearly three years. This track record supports analysts' confidence in the company's ability to meet its current fiscal 2024 revenue forecast.

The company's valuation has been slashed by half since it announced fourth-quarter 2023 results and provided revenue guidance for fiscal 2024 that fell short of market expectations.

In response, management has negotiated multi-year sales commitments with several large customers, offering discounts on traditional measurement products and upselling new products. Loop Capital believes this strategy is a single incident and should not cause concern for the broader ad verification market.

Currently, Integral Ad Science trades at 3.1 times Loop Capital's fiscal 2024 revenue forecast. That's a significant discount compared to its primary competitor DoubleVerify (NYSE:) (Buy/$39 PT), which trades at 7.0x compared to the Internet ad tech industry average of 4.8x. Analysts attributed the discount to investor skepticism about the company's expectations for this year.

Loop Capital concludes that Integral Ad Science's current stock valuation presents a favorable risk/reward scenario. The assessment is based on their analysis, which shows the company's fiscal 2024 guidance is no more risky than its main competitors.

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Investment Professional Insights

InvestingPro's latest data provides investors with more context given Loop Capital's bullish outlook on Integral Ad Science Holding Corp (NASDAQ: IAS ). Despite the challenging market, Integral Ad Science expects net profit to grow this year, in line with positive sentiment from analysts. However, it's worth noting that four analysts have lowered earnings for the period ahead, suggesting caution may be warranted.

From a valuation perspective, the company trades at a high P/E ratio of 213.7 and a trailing twelve-month adjusted P/E ratio of 215.3 through the fourth quarter of 2023. This is significantly higher than the market average, showing the company's earnings premium. However, the stock has experienced a significant decline over the past three months, down 32.71%, which may provide a buying opportunity for those who believe in the company's fundamentals and long-term strategy.

InvestingPro also shows that the company has moderate debt levels, with liquid assets exceeding its short-term liabilities, which is reassuring about its financial health. For investors looking for a more in-depth analysis, additional InvestingPro Tips are available, providing a comprehensive view of Integral Ad Science's financial health and future prospects.To discover more and take advantage of these insights, use the coupon code PRONEWS24 Annual or biennial Pro and Pro+ subscriptions receive an additional 10% discount.

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