FMP
SEMrush Price Target Raised Following Q1 Results
May 8, 2024 12:52 PM - Davit Kirakosyan
Image credit: FMP
Needham analysts increased their price target on SEMrush Holdings (NYSE:SEMR) from $15.00 to $18.00, maintaining a Buy rating, after the company reported its first-quarter 2024 earnings, which resulted in s stock price jump of more than 11% yesterday.
The analysts noted the company saw a reacceleration in customer additions after a unique holiday seasonality and reported that the Net Revenue Retention (NRR) remained stable at 107%, which they believe could be the lowest point.
Looking into the second half of 2024, the analysts are optimistic about SEMrush's prospects due to the recent launch of its new Enterprise SEO platform and an incremental AI monetization strategy, which they expect will sustain the 20% revenue growth by enhancing Average Revenue Per User (ARPU) and NRR. They were particularly impressed with the significant improvements in profitability, which increased by 2,040 basis points year-over-year, providing a more predictable path to reaching a 20% margin in the context of ongoing 20% revenue growth.
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