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5 Tailwinds That Could Carry Yext Shares Higher

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5 Tailwinds That Could Carry Yext Shares Higher
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KeyBanc Capital Markets upgraded shares of Yext Inc (NYSE: YEXT), premised on five tailwinds it sees for the company. The firm sees a favorable risk-reward profile at five times 2018 EV/share.

As such, the firm upgraded shares of the company from Sector Weight to Overweight, with a $16 price target.

Notwithstanding the upgrade, shares of YEXT were down 0.96 percent at $12.33 at last check.

Analysts Brent Bracelin, Alyssa Johnson and Clarke Jeffries outlined the tailwinds:

1. Underappreciated Voice Search And AI

The analysts see an increasing need to manage and update online location data in real time, helped by an increasing mix of mobile- and voice-first search queries. This, according to the analysts, could sustain revenue growth prospects for the company in excess of 30 percent for an extended period of time.

Based on conversations with customers, the analysts said Yext's cloud offerings are differentiated and well positioned to benefit, as voice search popularity grows through mobile and new in-home smart devices. The analysts estimate this could result in a 33 percent increment to its growth forecast in 2018.

See also: What's Next For Yext After Beating First Post-IPO Quarterly Estimates ?

2. Strong Leadership Team

KeyBanc Capital Markets noted that there have been several high-profile additions to the leadership team in the last nine months from companies including Adobe Systems Incorporated (NASDAQ: ADBE), salesforce.com, inc. (NYSE: CRM), Oracle Corporation (NYSE: ORCL), SAP SE (ADR) (NYSE: SAP)'s SuccessFactors and International Business Machines Corp. (NYSE: IBM).

The firm also said it is encouraged by the addition of Tamar Yehoshua, vice president of product management for Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG)'s Google Search to Yext's board.

3. And 4. Untapped International Expansion; New Product Innovations

The firm expects new product innovations to sustain high growth.

5. Compelling Valuation

KeyBanc Capital Markets noted shares of the company have been pressured, with the lock-up restriction that ended Oct.10. The firm said the shares could continue to be volatile, with the planned IVP distribution of 4.02 million shares to limited partners filed last Thursday.

"Based on a favorable risk-reward profile at 5x 2018 estimates vs. peers at 6.5x, coupled with underappreciated secular tailwinds tied to voice search and AI, we would start building positions in YEXT ahead of the ONWARD user event (11/1-11/2) where noteworthy partners will be presenting (Google, Amazon.com, Inc. (NASDAQ: AMZN), Microsoft Corporation (NASDAQ: MSFT), Snap Inc (NYSE: SNAP), etc.)," the firm said.

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Image Credit: By Yext Inc. (http://www.yext.com/img/yext-logo.png) [Public domain], via Wikimedia Commons

Latest Ratings for YEXT

DateFirmActionFromTo
Oct 2017KeyBancUpgradesSector WeightOverweight
May 2017JP MorganInitiates Coverage OnNeutral
May 2017PiperJaffrayInitiates Coverage OnOverweight

View More Analyst Ratings for YEXT
View the Latest Analyst Ratings

Posted-In: Alyssa Johnson Brent Bracelin Clarke Jeffries KeyBanc Capital MarketsAnalyst Color Upgrades Analyst Ratings Best of Benzinga

 

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