Why Are Zeta (ZETA) Shares Soaring Today

Petr Huřťák /
2024/04/04 11:04 am EDT

What Happened:

Shares of advertising and marketing company Zeta Global (NYSE:ZETA) jumped 16% in the morning session after Morgan Stanley upgraded the stock's rating from Equal Weight (Hold) to Overweight (Buy) and raised the price target from $12 to $17. The new price target represents a potential 45% upside from where shares traded when the upgrade was announced. The analyst explained the reason for the improved rating, adding, "We see additional catalysts with third-party cookie-deprecation driving demand and investor interest, conservatism in guidance and 2025 targets, and reduced overhang from private equity ownership."

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What is the market telling us:

Zeta's shares are very volatile and over the last year have had 18 moves greater than 5%. But moves this big are very rare even for Zeta and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 8 months ago, when the stock gained 10.8% on the news that the company reported a "beat and raise" quarter. Second quarter results beat analysts' billings and revenue expectations. Revenue guidance for the next quarter also exceeded Consensus. Similarly, the full year guidance came in ahead of Consensus and was raised. We were also impressed by Zeta's significant improvement in new large contract wins. 

On the other hand, gross margin declined. Overall, it was a strong quarter with impressive results that surpassed expectations for most of the key performance metrics.

Zeta is up 46.2% since the beginning of the year. Investors who bought $1,000 worth of Zeta's shares at the IPO in June 2021 would now be looking at an investment worth $1,381.

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