Taboola.com Analysts Hail Its Cost Restructuring & Focus Shift

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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