JMP maintains Nexxen stock Market Outperform, $15 target

JMP Securities reiterated a Market Outperform rating and $15 price target on Nexxen (NEXN), citing the company's comprehensive DSP/SSP platform and enhanced data capabilities through its VIDAA partnership. Nexxen's Q1 results beat expectations with adjusted EPS of $0.16 and revenue of $78.33 million, driven by a 40% YoY increase in CTV revenue and a 95% increase in adjusted EBITDA; the company reaffirmed its full-year 2025 guidance despite advertising market softness. Analysts see potential for multiple expansion given Nexxen's valuation and strategic focus on AI and expansion in the CTV advertising space.

Analysis

JMP Securities has reiterated a Market Outperform rating and a $15.00 price target for Nexxen (NASDAQ:NEXN), reflecting confidence in its integrated demand-side and supply-side platform, which is further strengthened by exclusive access to VIDAA's global Automatic Content Recognition (ACR) data. Nexxen's financial health is rated as "GREAT" with a score of 3.09 by InvestingPro, underpinned by robust cash flow and momentum. The company's strategic integration of generative AI is anticipated to enhance platform usability and performance, aiding in securing larger advertiser budgets. Financially, Nexxen demonstrates strong fundamentals with an 83.3% gross profit margin and 10.1% revenue growth over the last twelve months, positioning it to capitalize on the forecasted $123 billion shift from linear TV to Connected TV (CTV) advertising. Although Nexxen projects flat year-over-year EBITDA margins for 2025 due to investments in generative AI, a return to margin growth is expected in 2026, with medium-term targets around 40%. Currently valued at 4.0 times its projected 2026 EBITDA, analysts see potential for multiple expansion. This optimism is supported by Nexxen's recent first-quarter performance, where adjusted earnings per share reached $0.16, significantly above the $0.07 consensus, and revenue hit $78.33 million, surpassing the $73.2 million forecast. This was driven by a 40% year-over-year surge in CTV revenue and a 95% year-over-year increase in adjusted EBITDA to $23.1 million. Nexxen has maintained its full-year 2025 guidance, projecting approximately $380 million in contribution ex-TAC and around $125 million in adjusted EBITDA, despite noted softness in the broader advertising market. The company is actively expanding its U.S. and European sales teams and developing new AI solutions, alongside plans to extend its VIDAA partnership in North America via a non-binding memorandum of understanding, which could further solidify its market position. Other analysts, including Canaccord Genuity, also maintain a positive outlook.

Key Decisions for Investors

• Investors should consider Nexxen's strong Q1 earnings, positive analyst ratings, and strategic positioning in the high-growth CTV advertising market, particularly given its robust gross profit margins and revenue growth.
• Monitor the finalization of the extended VIDAA partnership in North America and the successful rollout and adoption of its nexAI suite, as these are key catalysts for future growth and margin expansion beyond 2025.
• Evaluate the current valuation relative to peers and the potential for multiple expansion as Nexxen executes on its AI investments and capitalizes on the shift to CTV, while being cognizant of the guided flat EBITDA margins in 2025 due to these strategic initiatives.