Cardlytics' Relationships With Top US Banks Is Key To Targeted Marketing Success: Analyst

Needham analyst Kyle Peterson reiterated a Buy rating on Cardlytics, Inc CDLX, raising the price target to $19 from $10.

CDLX posted 2Q23 results that came in above Street expectations on billings, revenue, and EBITDA as the operating environment is showing signs of stabilization and CDLX's optimization and efficiency efforts begin to show up in the financials. 

While economic conditions remain choppy, the analyst is encouraged by the 2Q results and CDLX's ability to navigate a challenging consumer spending and advertising environment.

In 3Q, CDLX expects billings of $111-$123 million. The analyst notes that the 3Q guide was also solid, bracketing consensus across the board.

Peterson views this as an encouraging sign that operating conditions could stabilize and that CDLX's strategic initiatives are working.

This apart, the analyst views CDLX's relationships with many of the largest consumer banks in the U.S. as providing an impressive customer base for its highly targeted marketing campaigns.

In addition, the positive trends in digital banking and payments will serve as natural tailwinds to growth, Peterson notes.

Based on the above, the analyst raised FY23 revenue estimates to $322.6 million, compared with a prior estimate of $316.8 million.

The analyst also increased the FY24 estimate to $375.6 million from the previous expectation of $372 million.

Peterson expects the company's acquisition of Bridg, Dosh, and Entertainment as additional levers to growth and hopes the purchase to diversify CDLX's MAU base and advertiser vertical mix. 

Price Action: CDLX shares are trading higher by 17.5% to $13.20 on the last check Wednesday.