On Tuesday, DA Davidson adjusted its outlook on Vivid Seats Inc. (NASDAQ:SEAT), a ticketing company, by reducing the price target to $6.50 from the previous $7.00. Despite the lower price target, the firm maintained a Buy rating on the company's shares.
The revision in the price target comes in response to a forecasted downturn in Vivid Seats' activity within performance marketing channels. As a result, DA Davidson anticipates approximately a 4.9% decrease in the company's Gross Order Value (GOV) for both 2024 and 2025.
The firm also expects a modest decline in revenue projections for 2024 and 2025, estimating a decrease of about 1% for each year. This reduction in revenue forecast is less pronounced than the decline in GOV, attributed to assumptions of a higher take-rate.
Despite these downward revisions, DA Davidson's forecast for Vivid Seats' adjusted EBITDA in 2024 remains nearly unchanged, shifting slightly from $167 million to $166 million. Looking ahead to 2025, the adjusted EBITDA forecast has been aligned more closely with the company's year-over-year top-line growth rate.
The new price target of $6.50 is based on an 8x multiple of the firm's 2025 estimated EV/EBITDA for Vivid Seats. This adjustment reflects the updated financial forecasts and the anticipated performance of the company in the coming years.
In other recent news, Vivid Seats Inc. has witnessed significant progress, with DA Davidson maintaining a Buy rating on the company and setting a price target at $7. The firm's positive outlook is grounded on Vivid Seats' unique strategy of promoting direct and repeat customer engagement through its mobile app and Rewards program, despite the substantial investment required. Vivid Seats has reported a 23% year-over-year increase in its Gross Order Value (GOV), totaling $3.921 billion for 2023. The company's revenue also rose by 19% to $713 million, generating $147 million in free cash flow.
In the first quarter of 2024, Vivid Seats announced over $1 billion in marketplace GOV, $191 million in revenues, and $39 million in adjusted EBITDA. A notable achievement was the company's success in women's sports, with a women's sports team topping sales on their platform for the first time. The company is on track for international expansion by year-end and has experienced positive synergies from its acquisition of Vegas.com. These recent developments underscore Vivid Seats' commitment to growth and innovation in the online ticket marketplace.
InvestingPro Insights
Following DA Davidson's adjusted outlook on Vivid Seats Inc. (NASDAQ:SEAT), recent data from InvestingPro sheds light on the company's financial health and market performance. With a market capitalization of $892.9 million and a P/E ratio of 6.68, Vivid Seats is trading at a valuation that seems reasonable in the current market environment. The P/E ratio slightly adjusts to 7.98 when looking at the last twelve months as of Q1 2024, suggesting a modest increase in earnings expectations.
InvestingPro Tips indicate that the stock is currently in oversold territory, which could attract investors looking for potential bargains. However, it's important to note that the stock has seen a significant price decline over the last three months, with a total return of -23.5%. Analysts predict the company will be profitable this year, which is corroborated by a profitable last twelve months as of Q1 2024. Although Vivid Seats does not pay a dividend, the focus for investors may instead be on capital gains, especially considering the company's fair value is estimated at $5.51 by InvestingPro, which is higher than the previous close price of $4.2.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips on Vivid Seats Inc. that could further guide investment decisions. There are a total of 10 InvestingPro Tips available for SEAT, which can be explored in detail for those who are interested.
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