Analyst Sees Its FCF, Cash Preservation Adding Upside

  • Credit Suisse analyst Stephen Ju hosted a series of investor meetings with Ltd's TBLA CEO Adam Singolda and CFO Stephen Walker and shared the key takeaways. 
  • Ju reiterated Outperform on Taboola and a $7 price target.
  • The management reiterated a focus on FCF generation and cash preservation as overall advertiser spending decreases, he noted. As such, a significant M&A transaction is unlikely through at least 2023.
  • Also Read: Analysts Hail Its Cost Restructuring & Focus Shift
  • Taboola will look to broaden the advertiser base by cross-selling to what it currently has (~15k). 
  • New publisher growth and more significant contributions from existing publishers should lead to annual ex-TAC growth of ~20% for Taboola Ads, he noted.
  • In addition to recent partnerships with Fox Sports and Gray TV, Taboola highlighted an attractive pipeline that will further expand supply and ultimately surface more effective ads over time, given more excellent 1P signals. 
  • Following the disclosed cost restructuring, management noted retention rates for unaffected employees remain high, with an acute focus now on improving products and onboarding, new publishers or advertisers. 
  • Price Action: TBLA shares traded lower by 4.36% at $1.87 on the last check Thursday.
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