On Monday, Evercore ISI updated its financial outlook for Magnite (NASDAQ:MGNI), a leading provider of advertising technology solutions, by increasing the stock’s price target to $15 from the previous $13. The firm has maintained an Outperform rating on the shares.

The adjustment comes on the heels of Magnite’s recently announced partnership with Netflix (NASDAQ:) and subsequent discussions with Magnite management at the Nothing But Net Internet conference earlier in the week. Evercore ISI has modestly increased its forecasts for Magnite’s revenue and EBITDA for fiscal year 2025 by approximately 2% and 4%, respectively.

The partnership with Netflix is anticipated to bolster Magnite’s connected TV (CTV) revenue significantly. Analysts project that the collaboration could contribute an additional $10 to $30 million in CTV revenue for Magnite in fiscal year 2025. However, these estimates are contingent on the extent of inventory Netflix opts to make available programmatically, a decision that is currently pending, according to Magnite’s management.

Magnite has identified Netflix as potentially becoming one of its largest CTV customers. It is important to note that currently, no single customer constitutes more than roughly 10% of Magnite’s CTV revenue. The partnership is seen as a strategic move for Magnite as it continues to expand its presence in the rapidly growing CTV advertising market.

InvestingPro Insights

As Magnite (NASDAQ:MGNI) forges a promising partnership with Netflix (NASDAQ:NFLX), investors are keeping a close eye on the evolving landscape of advertising technology solutions. According to the latest data from InvestingPro, Netflix has a formidable market capitalization of $276.47 billion and is trading at a P/E ratio of 43.27, reflecting its significant presence in the entertainment industry. With a PEG ratio for the last twelve months as of Q1 2024 at 0.78, Netflix’s earnings growth is considered in line with its P/E ratio, suggesting a potentially balanced growth-to-valuation scenario.

Netflix’s revenue growth remains robust with a 9.47% increase over the last twelve months as of Q1 2024, and its gross profit margin stands strong at 43.06%. Furthermore, the company’s operating income margin for the same period is 22.54%, indicating efficient management of its operations. These metrics underscore why Magnite views the partnership as a significant strategic move, as Netflix’s financial health can translate into reliable and potentially lucrative CTV revenue streams for Magnite.

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