Fiverr's Promise In 2024: Analyst Sees Upswing Despite Current Market Uncertainty

UBS analyst Kunal Madhukar initiated coverage on the shares of Fiverr International Ltd FVRR with a Buy rating and a price target of $33.

The analyst believes FVRR's volumes lead overall job listings by two or more quarters, and job listings have started stabilizing.

Expectations are low, and while macro remains uncertain, the analyst sees scope for expectations and multiples to trend up as the outlook firms up in 2024.

The analyst sees significant upside from current share prices despite assuming lower than seasonal GMV trends, flat take rates, flat gross margins, and a valuation multiple that is similar to that of Upwork Inc UPWK, which has historically traded at a discount to FVRR.

UBS economists are projecting modest quarter-on-quarter decline in GDP in 4Q23 and 1Q24 before growing again starting in 2Q24, said the analyst.

So, the analyst is projecting growth to begin reaccelerating in 2024, albeit at below historical seasonality levels through 2025. 

The analyst has valued the shares using a ~3x multiple on 2025E gross profits, which is consistent with the ~3x multiple the analyst uses for UPWK, but below the average multiple during the pre and post-COVID periods. 

Price Action: FVRR shares closed higher by 2.44% at $24.75 on Wednesday.