On Friday, Needham maintained a Buy rating on Nexxen (NASDAQ:NEXN) and increased the stock's price target to $9.50 from $8.50. Nexxen's third-quarter results for 2024 surpassed expectations, prompting the firm to adjust its financial forecasts for the company. The updated guidance includes a higher adjusted EBITDA of approximately $107 million, an increase from the previously projected $100 million.
Nexxen's third-quarter performance was notable for several reasons, according to Needham. The company's choice to delist from the London Stock Exchange (LON:LSEG) was seen as a positive move. Additionally, Nexxen experienced a 52% growth in Connected TV (CTV) revenue and reported that 90% of its advertising campaigns during the third quarter utilized data. The firm also highlighted Nexxen's $10 million in political revenue expected in the second half of 2024, as well as a significant improvement in EBITDA margins, which rose by 900 basis points year-over-year to 37% in the third quarter.
Based on these strong results, Needham has revised its estimates for Nexxen's future performance. The firm has not only raised its forecast for the fiscal year 2025 but has also introduced its estimates for the fiscal year 2026. The increased price target reflects this optimistic outlook for Nexxen's financial trajectory.
In the analyst's commentary, it was emphasized that Nexxen's third-quarter achievements were particularly impressive and contributed to the decision to raise the price target. The reiterated FY24 Contribution excluding Traffic Acquisition Costs (ex-TAC) is expected to be in the range of approximately $340 million to $345 million.
The upward revision of Nexxen's stock price target and financial estimates comes after a period of strong performance, which includes strategic moves and robust growth in key revenue segments. The company's focus on data utilization and political advertising revenue has been underlined as significant contributors to its financial success.
In other recent news, Nexxen International Ltd. has made several key announcements. The company has announced its intention to delist from the AIM market, a decision that will be discussed at the upcoming Annual General Meeting. Nexxen has also reported strong financial performance in the second quarter, exceeding projections and initiating a $50 million share repurchase program.
RBC Capital has shown confidence in Nexxen's prospects, raising its price target from $9 to $11 and maintaining an Outperform rating. Moreover, the company's directors have engaged in transactions under Rule 10b-5 as part of their planned financial management strategies.
In other developments, Nexxen has set a date for the release of its third quarter 2024 financial results, providing investors with the opportunity to assess the company's performance over the past quarter.
InvestingPro Insights
Nexxen's recent performance and Needham's optimistic outlook are further supported by real-time data from InvestingPro. The company's market cap stands at $507.64 million, reflecting its growing presence in the digital advertising space. Notably, Nexxen's gross profit margin is an impressive 81.81% for the last twelve months as of Q2 2024, aligning with one of the InvestingPro Tips highlighting the company's "impressive gross profit margins."
The revenue growth of 5.14% in Q2 2024 compared to the previous quarter supports Needham's positive view on Nexxen's financial trajectory. Additionally, the EBITDA growth of 23.82% over the last twelve months as of Q2 2024 corroborates the analyst's observation of improved EBITDA margins.
InvestingPro Tips also indicate that Nexxen "holds more cash than debt on its balance sheet" and that "liquid assets exceed short-term obligations," suggesting a strong financial position. This solid foundation could support the company's growth initiatives in CTV and data-driven advertising campaigns.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Nexxen, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.