On Tuesday, KeyBanc Capital Markets began coverage on Zeta Global Holdings Corp (NYSE:ZETA) stock, issuing an Overweight rating and setting a price target of $40.00.
The company’s platform, which offers marketers the ability to acquire, retain, and expand their customer base across various channels, is underpinned by its substantial data assets and customer data platform (CDP). Zeta Global boasts over 240 million opted-in end users, a figure that significant brands leverage for targeted campaigns.
According to the analyst from KeyBanc, Zeta Global’s reliance on first-party data has positioned it to benefit from industry challenges like cookie deprecation and changes in bulk email distribution. As a result, the company has experienced a favorable balance of new client acquisitions, along with cross-selling and upselling opportunities.
Since the beginning of 2023, Zeta has seen double-digit growth in both the number of scaled customers—those spending over $100,000—and the average revenue per scaled customer.
The analyst highlighted the company’s impressive stock performance, attributing it to Zeta’s transition from “no credit” to “credit” status in the market. Despite this significant increase in share value, KeyBanc pointed out that Zeta Global’s shares are trading at less than 5 times its projected 2025 revenue.
This valuation is approximately two turns lower than its primary peers, even though Zeta’s revenue growth is nearly 10% faster than the median of these competitors.
The $40 price target set by KeyBanc is rooted in a 10-year discounted cash flow and free cash flow per share analysis. The firm anticipates that Zeta Global’s consistent growth and incremental margin expansion will be recognized by the market in both the short and long term, justifying the positive outlook and target price.
InvestingPro Insights
Zeta Global Holdings Corp’s recent performance aligns with KeyBanc’s optimistic outlook. According to InvestingPro data, the company has shown impressive revenue growth, with a 32.61% increase in the most recent quarter. This growth supports KeyBanc’s observation of Zeta’s successful client acquisition and expansion strategies.
InvestingPro Tips highlight that Zeta operates with a moderate level of debt and has liquid assets exceeding short-term obligations, indicating financial stability. This financial health could contribute to the company’s ability to invest in growth initiatives and capitalize on market opportunities, as suggested in the KeyBanc analysis.
The stock’s strong performance, noted by KeyBanc, is further confirmed by InvestingPro data showing a remarkable 220.88% price total return over the past year. This aligns with the analyst’s view of Zeta’s transition to “credit” status in the market.
While KeyBanc points out Zeta’s attractive valuation compared to peers, it’s worth noting that InvestingPro Tips indicate the stock is trading at high revenue and Price/Book multiples. This suggests investors are pricing in significant future growth expectations.
For readers interested in a deeper dive, InvestingPro offers 12 additional tips for Zeta Global Holdings Corp, providing a more comprehensive analysis of the company’s financial health and market position.
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