On Thursday, Veritone Inc . (NASDAQ:VERI) received an upgrade in its stock rating from Roth/MKM, moving from Sell to Neutral. The firm also adjusted the price target for Veritone, setting it at $1.85, a decrease from the previous target of $2.00.
The upgrade is based on the expectation that Veritone will begin to see a return to growth by the middle of 2024. This projection is tied to easing comparables in the fourth quarter and anticipated improvements following a period of lower hiring by Amazon (NASDAQ:AMZN). Roth/MKM notes that Veritone could start gaining traction and return to growth on a like-for-like basis by mid-2024.
Roth/MKM cited several factors contributing to the improved outlook for Veritone. These include a downsized cost structure, improved liquidity, and the potential for cross-selling opportunities. The firm believes these elements collectively suggest that the downside risk for Veritone has been mitigated, warranting the upgrade to a Neutral rating.
The analyst's commentary highlighted that while there are still challenges ahead for Veritone, the possibility of growth returning and the company's strategic adjustments provide a more stable foundation.
"Further optimism depends on enhanced revenue visibility and successful product adoption," wrote the analyst.
Veritone's future performance is now under watch, with the market anticipating the company's progress towards achieving the growth and stability outlined by Roth/MKM. The firm's revised price target and stock rating reflect a cautious but improved outlook for the artificial intelligence technology company.
InvestingPro Insights
Following the recent stock rating upgrade for Veritone Inc. (NASDAQ:VERI) by Roth/MKM, it's important to consider additional insights that could impact investor decisions. With a Market Cap of $61.26M USD and a significant Gross Profit Margin of 79.26% over the last twelve months as of Q1 2023, Veritone demonstrates a strong ability to retain earnings at the gross level. However, this is juxtaposed against a Revenue Growth decline of -14.74% during the same period, signaling potential challenges in top-line growth.
InvestingPro Tips highlight that Veritone may face difficulties in making interest payments on debt, as well as a rapid cash burn rate. Additionally, analysts are not optimistic about profitability in the current year, expecting net income to drop. These factors, combined with a high price volatility, as evidenced by the Price Total Returns ranging from -8.08% over the last week to -83.45% over the last year, suggest that investors should approach with caution.
For those looking to delve deeper, a subscription to InvestingPro can provide access to over 15 additional InvestingPro Tips for Veritone, offering a more comprehensive analysis of the company's financial health and stock performance. Currently, InvestingPro subscriptions are available at a special New Year sale with a discount of up to 50%. Plus, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription.
Understanding the full picture of Veritone's financial standing and market dynamics is crucial for investors, especially in light of the recent rating upgrade and price target adjustment. The insights from InvestingPro, including the noted tips and real-time metrics, can help investors make more informed decisions in this volatile market.
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