On Thursday, Evercore ISI resumed coverage on LiveRamp Holdings Inc. (NYSE: NYSE:RAMP) with an Outperform rating and a price target of $50. The firm highlighted the company's potential for growth reacceleration in 2024 and beyond, following a slowdown in 2023 attributed to macroeconomic factors. Evercore ISI's price target is based on approximately four times the firm's current calendar year 2025 sales estimate for LiveRamp.
The analyst pointed to several factors that support LiveRamp's positive outlook. The improvement in the digital advertising environment is expected to benefit the company's comprehensive suite of services, including identity, activation, addressability, and measurement capabilities. The acquisition of Habu, a data clean room service, is also seen as a strategic move that enhances LiveRamp's offering by improving integrations with public cloud providers and expanding measurability within restricted advertising platforms, which represent a significant portion of the non-search digital advertising market.
LiveRamp's financial strategy is also a key element in its projected success. The company aims for a 'rule of 40' operating profile, which involves balancing growth and profitability. This includes an anticipated expansion of operating margins by around 500 basis points in fiscal year 2024, as per the latest guidance, with similar growth expected in fiscal year 2025. The margin improvement is further supported by a planned share repurchase program, with $60-80 million expected to be spent in fiscal year 2024.
Despite the recent challenges, LiveRamp's third fiscal quarter results, which ended in December, were solid, reinforcing the firm's confidence in the company's valuation. Evercore ISI suggests that LiveRamp's current valuation of approximately three times enterprise value to calendar year 2025 sales provides an opportunity for upside, considering the improving fundamental factors.
InvestingPro Insights
As LiveRamp Holdings Inc. (NYSE: RAMP) gears up for a potential growth reacceleration, insights from InvestingPro provide a deeper understanding of the company's current financial health and future outlook. A notable InvestingPro Tip highlights that management has been aggressively buying back shares, an action that signals confidence in the company's value and can often lead to an increase in stock price due to the reduced number of shares outstanding.
In addition, the company's financial strategy seems to be on solid ground, as another InvestingPro Tip reveals that LiveRamp holds more cash than debt on its balance sheet. This strong liquidity position could provide the company with the flexibility to navigate uncertain economic conditions and invest in strategic growth initiatives.
InvestingPro Data further enriches the picture with key metrics. LiveRamp's market capitalization stands at $2.64 billion, indicating its substantial presence in the market. The company's aggressive share repurchase program may be a factor in its significant 43.56% three-month price total return, showcasing a robust recent performance. Moreover, with a price that's currently at 92.55% of its 52-week high, investors may view LiveRamp as maintaining a strong market position.
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