YEXT is still undervalued, Roth says

Ahead of the company’s second quarter results, Roth MKM analyst Rohit Kulkarni says buy YEXT (YEXT Stock Quote, Chart, News, Analysts, Financials NYSE:YEXT)

On Wednesday, September 6, YEXT will report its Q2, 2024 results.

The analyst says that despite already being up 38 per cent this year, the company has room for more.

“We believe that following recent layoffs, Yext’s completely revamped C-suite is ready to fire on all cylinders,” the analyst argued. “Yext has attractive cash & cash flow characteristics, >20% market cap in cash today, and is likely to generate >$50mn in FCF in 2024. Yext is a play on enterprise adoption
of Gen AI tools to improve worker productivity across marketing and other workflows. Notably, in its 1Q earnings report, Yext highlighted the return of several “boomerang” clients, indicating former customers re-engaging with the platform. Also, Yext is well-positioned for cross- and up-sell opportunities, with 76% of direct customers already utilizing 1 or 2 products.

In a research update to clients September 1, Kulkarni maintained his “Buy” rating and one-year price target of $12.50 on YEXT.

The analyst thinks YEXT will generate EPS of $0.25 on revenue of $406.8-million in fiscal 2024.

“Our price target of $12.50 is based on applying 3.0x ‘CY ’24E Revs and 22.0x CY ’24E EBITDA. Impediments to our price target include a deeper-than-expected economic downturn, the departure of senior execs at the company, or heightened competitive pressure from large tech companies,” Kulkarni concluded.