On Monday, Magnite Inc. (NASDAQ:MGNI) received an upgrade from a Hold to a Buy rating by Cannonball Research. This change is accompanied by a new price target of $17.00 for the company's stock. The adjustment follows Magnite's recent partnership with NFLX, which has been seen as a pivotal development for the company.
The analyst from Cannonball Research pointed out that Magnite had faced challenges following its second-quarter fiscal year 2023 results, which did not meet expectations. Industry developments indicated a shift in the programmatic advertising landscape, with demand-side platforms (DSPs) and supply-side platforms (SSPs) like Magnite creating solutions to bypass each other. These solutions include Magnite's ClearLine and TTD's OpenPath.
The disparity in revenue growth rates between DSPs and SSPs, along with the history of estimates revisions, had previously made it clear to investors which side was poised for success. The announcement in March by DIS regarding direct integration with DSPs seemed to confirm this trend, further challenging SSPs' position in the market.
However, the recent partnership with NFLX has marked a significant turnaround for Magnite. As the primary programmatic partner and the sole SSP involved with NFLX, this alliance is considered a major positive for Magnite. The analyst anticipates that this development will lead to upward revisions of future earnings estimates and a boost in investor confidence in the SSP business model.
Magnite's new partnership and the upgraded rating with an increased price target reflect a potential shift in the company's prospects. Investors and market watchers will likely follow Magnite's performance closely to see if the anticipated improvements materialize in the company's financial results.
InvestingPro Insights
Following the recent upgrade by Cannonball Research, Magnite Inc. (NASDAQ:MGNI) has shown promising signs that may interest investors. An InvestingPro Tip highlights that analysts predict the company will be profitable this year, which aligns with the positive outlook from the partnership with NFLX. Additionally, three analysts have revised their earnings upwards for the upcoming period, indicating a potential increase in financial performance expectations.
From a data perspective, Magnite's market capitalization stands at $1.73 billion, which, coupled with a 33.41% return over the last month, showcases the market's response to recent developments. The company's revenue growth has been steady, with an 8.44% increase over the last twelve months as of Q1 2023, and a more robust quarterly growth rate of 14.73%. While Magnite does not pay dividends, this may not deter growth-focused investors, especially considering the company's positive price momentum.
For those looking for a deeper dive into Magnite's financials and future outlook, InvestingPro offers additional insights. There are 11 more InvestingPro Tips available that could provide a more comprehensive understanding of the company's position. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for further access to valuable investment analytics.
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