Can PubMatic Weather Macro Issues? Analysts Remain Bullish Citing Potential Growth Opportunities

Here is what analysts are saying about digital advertising company PubMatic Inc. PUBM, which just reported second-quarter financial results, and beat consensus earnings per share and revenue estimates.

The PUBM Analysts

• RBC Capital analyst Matthew Swanson has an Outperform rating and a price target of $28.
• JMP analyst Andrew Boone has a Market Outperform rating and lowers the price target from $40 to $34.
• Raymond James analyst Andrew Marok has an Outperform rating and raises the price target from $24 to $25.
• KeyBanc analyst Justin Patterson has a Sector Weight rating and no price target on the stock.

See Also: PubMatic CEO Talks Digital Advertising On 'Money Mitch' 

The Analyst Takeaways: Swanson says PubMatic will weather the macroeconomic storm as results come in ahead of estimates.

“All you need to know: a strong result, despite the multi-faceted challenges in the macro environment,” Swanson said, citing management's “prudent approach” to guidance with the potential of a softening environment.

Swanson also highlighted diversification of business lines in the earnings report.

“Management pointed to the 150% CTV growth and combined mobile and video revenue which accelerated growth to 43% year-over-year and now accounts for a record 72% of total revenue.”

June was the strongest month in the second quarter and revenue was better than expected, according to Boone.

“With PubMatic well positioned across mobile and video, SPO agreements consolidating spend on the platform and CTV ramping, we believe PubMatic has multiple levers for growth,” he said.

The analyst sees digital advertising being a $200 billion opportunity and PubMatic growing its market share over time.

See Also: Taboola And Pubmatic Get Downgraded

Marok saw progress for the company in the second quarter and thinks second half guidance was “better than feared.”

“PubMatic has been relatively insulated from the worst of the ad market turmoil; its omnichannel offering and vertical diversification being key factors in its ability to weather the storm,” Marok said.

PubMatic may have market share gains, but Patterson remains cautious about the fourth quarter.

“PubMatic delivered a solid quarter despite macro challenges and broad pullbacks of ad spend, which we believe speaks to market share gains,” Patterson said, citing the company's opportunities to work with Microsoft Corp. MSFT in its partnership with Netflix NFLX.

“However, we believe this was a predictive statement rather than a sign of current discussions.”

The analyst sees many future opportunities for PubMatic but notes that mobile and non-CTV video will be the key growth drivers in the near-term.

PUBM Price Action: PubMatic shares are up 21% to $21.44 on Tuesday.