On Monday, Truist Securities revised its forecasts on… Stock struggle ,Inc. (NYSE:), a leading global provider of stock photography, stock footage, stock music and editing tools, by lowering its stock price target from $70.00 to $65.00. Despite the lower price target, the company maintained a Buy rating on the stock.
Shutterstock's first-quarter 2024 results reflected mixed performance, with the company's Digital Design Software (DDS) segment showing strong execution, supported by new and expanding data deals. However, the content sector has faced challenges as management works to reposition it for expected growth in the second half of 2024.
The company's recent acquisition of Envato, one of its largest deals to date, is seen as a strategic move to add scale, increase subscription services and position Shutterstock further in the video market.
The deal, worth about 7 times adjusted earnings before interest, taxes, depreciation and amortization (AEBITDA) before synergies, is reasonable in terms of the purchase price. However, it introduces an additional layer of execution risk.
Truist Securities highlighted Shutterstock's current valuation metrics, noting that the stock trades at 5 times enterprise value to AEBITDA (EV/AEBITDA), 18 times price to earnings (P/E), and offers a free cash flow yield of 12%. (FCF).
These numbers indicate that the stock price is undervalued, making it an attractive investment opportunity according to the company. The revised $65 price target reflects recalibration in response to the recent earnings report and the potential risks and benefits associated with the Envato acquisition.
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InvestingPro Insights
For investors considering taking a position in Shutterstock, Inc. (NYSE:SSTK), current InvestingPro data shows a market cap of $1.41 billion, with a price-to-earnings ratio of 15.16, reflecting a more conservative valuation compared to the broader market. Furthermore, the company's revenue for the past twelve months as of Q1 2024 was $873.62 million, with a modest growth rate of 3.51%. The dividend yield according to the latest data is 3.06%, which demonstrates the company's commitment to returning value to shareholders, having raised its dividend for 4 consecutive years.
Amid the recent market movements, Shutterstock stock has seen a notable decline over the past week, with a one-week total return of -8.6%. Despite this, the company's strong cash position, with more cash than debt on its balance sheet, and the ability to cover interest payments with its cash flow, provides a cushion against short-term market volatility. Furthermore, Shutterstock has been profitable over the past 12 months, and analysts expect profitability to continue this year.
To delve deeper into Shutterstock's financial health and future prospects, there are additional tips available to InvestingPro, which can be accessed on the platform. To take advantage of these ideas, use the coupon code ProNews24 Get an extra 10% off your Pro and Pro+ subscription annually or every two years. With 5 additional tips included in InvestingPro for Shutterstock, investors can get a comprehensive understanding of a stock's potential.
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