Ibotta Has 'Significant Revenue Upside': 4 Analysts Begin Coverage

Zinger Key Points
  • Ibotta offers a compelling combination of growth and profitability, one analyst said.
  • The company is likely to generate 20% revenue growth through 2026 with nearly 70% EBITDA flow through, another analyst added.

Shares of Ibotta Inc IBTA were climbing in early trading on Monday, less than a month after its initial public offering (IPO).

  • Needham analyst Bernie McTernan initiated coverage with a Buy rating and price target of $125.
  • BofA Securities analyst Curtis Nagle began coverage with a Buy rating and price target of $117.
  • Goldman Sachs analyst Eric Sheridan initiated coverage with a Neutral rating and price target of $103.
  • JMP Securities analyst Andrew Boone began coverage with a Market Outperform rating and price target of $130.

Check out other analyst stock ratings.

Needham: "Ibotta offers a compelling combination of growth and profitability," which is being driven by the company's pivot to a "performance network that is integrated within third-party publishers," like Walmart Inc WMT, McTernan said in the initiation note. "We think this pivot will boost the company’s share of performance budgets, improve its unit economics, and elevate IBTA to a rule of 60 company," he added.

The analyst further stated that he expects Ibotta to "deepen its relationships with its core CPG advertisers, increase the number of its third-party redeemers at existing publishers, and boost the number of publishers on its platform, all of which would feed into its flywheel."

BofA Securities: Ibotta is the biggest US platform for digital rewards, connecting 2,400 brands to shoppers who earn cashback for purchases, Nagle said. He added that the company is among a beneficiary of sticky inflation and elevated interest rates.

"We see significant revenue upside potential for Ibotta’s growth engine, third-party rewards programs for retailers (3PP)," the analyst wrote. The company is likely to generate 20% revenue growth through 2026, "with nearly 70% EBITDA flow through," he further stated.

Goldman Sachs: "We view Ibotta as positively levered to several long-term secular growth themes within our sector across both digital advertising and grocery (shift in spend from offline to online channels in both industries)," Sheridan said.

While digital advertising is being impacted by the current macroeconomic environment, "the pace/cadence of 3P redeemer additions" and the impact of Ibotta's partnership with Walmart could be the "biggest potential drivers to upside/downside volatility in the coming year," he added.

JMP Securities: The Ibotta Performance Network is transforming the CPG promotion industry, Boone said. "Walmart accelerates Ibotta’s Flywheel, while scale attracts more merchants and brand budgets," he added.

"Ibotta had 26% EBITDA margins in 2023 and with 85%+ gross profit margins, we think it can reach its long[1]term EBITDA margin target of 45%+ over time," the analyst further wrote.

IBTA Price Action: Shares of Ibotta risen by 2.24% to $104.50 at the time of publication on Monday.

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Posted In: Analyst ColorInitiationAnalyst RatingsMoversTrading IdeasAndrew BooneBernie McTernanCurtis NagleEric SheridanExpert IdeasGoldman SachsJMP SecuritiesNeedhamStories That Matter
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