Taboola.com Analysts Hail Its Cost Restructuring & Focus Shift

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  • Taboola.com Ltd TBLA announced a cost restructuring and a focus shift in top priorities to performance advertising, e-commerce, and header bidding. More near-term, management reiterated 3Q22 guidance and 2022 Adjusted EBITDA of ~$152 million or the low end of its previously-offered range
  • KeyBanc analyst Justin Patterson reiterated Sector Weight.
  • Given prolonged macro uncertainty and near-term revenue growth rates below Taboola's longer-term targets, he believes cost restructuring initiatives were appropriate.
  • While it made achieving his/Street's $172 million/$180 million EBITDA targets in 2023E more feasible, he remains cautious that prolonged softness in the advertising market could keep valuations depressed for TBLA and peers.
  • Needham analyst Laura Martin reiterated a Buy and $5 price target.
  • TBLA reaffirmed its guidance for 3Q22, implying it is not seeing a slowdown in its business compared with two months ago.
  • Shutting down long-term high-profile growth initiatives such as TBLA everywhere and TBLA anytime implies its plans to prepare for persisting slowdown in ad spending well into 2023.
  • He believes investors will applaud TBLA's focus on FCF and near-term ROICs because macroeconomic uncertainty raises the risks of long-term paybacks.
  • Credit Suisse analyst Stephen Ju reiterated Outperform and a $7 price target.
  • The re-rating reflected Connexity, likely accelerating TAM expansion and generating superior yield to pull Taboola away from peers.
  • It reflects consolidating leadership position in publisher services as yield is complemented with higher R&D spend.
  • It also reflects longer-term optionality for audience and service proliferation into the recommendation of anything. 
  • Price Action: TBLA shares traded lower by 1.44% at $2.40 on the last check Wednesday.
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