On Tuesday, KeyBanc Capital Markets maintained its positive stance on NerdWallet Inc (NASDAQ: NRDS), with a reiterated Overweight rating and a $22.00 price target. The financial services firm cited several factors for its outlook, including the company's potential to gain market share and improve margins despite uncertain macroeconomic conditions.
KeyBanc highlighted that while the macro environment presents mixed signals, which casts some doubt on the trajectory of NerdWallet's return to double-digit growth in the second half of 2024, the company is still well-positioned. According to the firm, NerdWallet has sufficient cost management options to exceed its non-GAAP operating margin and EBITDA goals, which are set between 6.5-8% and 18-19.5%, respectively, for the current year.
The analyst from KeyBanc expressed confidence in NerdWallet's ability to outperform, emphasizing the company's status as a market share gainer with rising margins. The firm also noted that NerdWallet's EBITDA valuation is two turns lower than its peer LendingTree, which they consider unjustified.
The reaffirmed $22.00 price target is based on a 10.5x multiple of the company's projected 2025 enterprise value to EBITDA (EV/EBITDA). This valuation reflects KeyBanc's anticipation of NerdWallet's financial performance and growth prospects over the next couple of years.
NerdWallet, known for its financial guidance and comparison services, continues to navigate through a challenging economic landscape with the strategic levers at its disposal. KeyBanc's outlook suggests confidence in the company's strategic initiatives and financial management moving forward.
InvestingPro Insights
As NerdWallet Inc (NASDAQ: NRDS) continues to attract attention with its financial strategies and market positioning, InvestingPro data provides a deeper dive into the company's financial health and performance. With a market cap of approximately $1.04 billion and a high gross profit margin of 90.99% over the last twelve months as of Q4 2023, NerdWallet showcases strong profitability potential. Despite a negative P/E ratio of -95.49, indicating that the company has not been profitable over the last twelve months, analysts predict profitability this year, aligning with KeyBanc's positive outlook.
InvestingPro Tips highlight that NerdWallet's net income is expected to grow this year, and the company's liquid assets exceed short-term obligations, providing financial stability. Furthermore, a large price uptick of 84.39% over the last six months signals growing investor confidence. For readers looking to explore more about NerdWallet's financial prospects, InvestingPro offers additional insights. There are five more InvestingPro Tips available, which can be accessed with the use of coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
While NerdWallet does not pay dividends, suggesting a reinvestment strategy aimed at growth and expansion, the company's strategic levers and KeyBanc's analysis indicate a strong potential for future performance. With the next earnings date slated for April 25, 2024, investors and analysts alike will be watching closely to see if NerdWallet's financial maneuvers will steer them towards the anticipated double-digit growth.
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