BofA Securities analysts downgraded DoubleVerify (NYSE:DV) from Buy to Underperform, significantly lowering the price target from $45.00 to $18.00, after the company reported a Q1 miss, which resulted in more than 38% drop in its stock price yesterday.

The analysts cited several reasons for the downgrade, including the predominantly long positioning in the stock, challenges in justifying the company’s high long-term growth expectations, and a lack of bullish catalysts. They noted that the mix of call traffic and the view that DoubleVerify was a unique investment opportunity in the digital ad verification market suggest over-optimism among investors.

Additionally, the analysts pointed to the company’s lowered guidance for 2024, which forecasts year-over-year growth at 17%, down from 22%. They argued that this adjustment and the reasons behind it do not align with expectations of a consistently high growth rate above 20%. Given these revised perspectives, the analysts believe that DoubleVerify no longer warrants a premium valuation compared to Integral Ad Science (IAS), especially in light of IAS’s growth-adjusted EBITDA multiple.