Here are five stocks that Wall Street’s best-performing analysts think investors might be overlooking. Despite Squarespace’s solid second-quarter performance, Guggenheim analyst Ken Wong is anticipating some concern from investors.
Digging deeper into the print, Squarespace posted revenue and billings of $196 million (a 31% year-over-year increase) and $206 million (a 24% year-over-year gain), respectively. Both results beat the Street’s $189 million and $200 million calls.
“Management also highlighted better cash retention this year, which should stave off concerns that pandemic subscription cohorts could see elevated churn as economies normalize,” the analyst added.
“We believe the increase would have been just ‘good enough’ in a vacuum. However, we expect investors to scrutinize the Q3 revenue outlook guide ($193-198 million, 19-22%), which projects for a modest sequential decline at the mid-point and falls ~$2 million below consensus estimates ($197.5 million).
Management emphasized a prudent approach to outlook due to the uncertain macro and health climate. Investors we caught up with were understanding of the volatile demand environment, but felt the lack of specificity around which business segments and KPIs magnified the confusion,” Wong explained.
Wong is standing in the bull camp. “We remain positive on SQSP’s long-term opportunity to enable digital commerce… We expect a more thoughtful growth roadmap at the company’s inaugural Analyst Day in November.
Following the noisy outlook, we expect investors to home in on the commentary around revenue mix shift, additional monetization/take rate opportunities, details surrounding the Tock acquisition and integration and other potential long-term growth accelerators,” he commented.
Needham’s Laura Martin tells investors that there are “several upside value drivers we’ve underestimated, until now.”
Martin stated, “TTD is trying to roll out Unified ID 2.0 into CTV targeting, and all other digital advantage channels, and then to convince advantage buyers that unduplicated reach and data granularity is much better in the Open Internet than from Walled Gardens such as Amazon, Google/ YouTube, Facebook, Roku, etc.
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Finally, TTD believes Unified ID has reached ‘critical mass,’ (our estimate is 150-200 million consumers) implying every company must accept Unified ID targeting.”
“TTD believes that the 79 million households in the U.S. that advertisers can reach using CTV ad units is larger than total linear TV homes… CTV revenues grew faster than 101% total revenue growth year-over-year. CTV consortiums like Open AP are making their targeting IDs comparable with Unified ID 2.0 as are some CTV owners directly, such as FUBO,” Martin said.
