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Evercore ISI adjusted its outlook on System 1 (NYSE:SST), a data-driven marketing company, on Tuesday, reducing its price target from $3.00 to $2.00 while maintaining an In Line rating. The company highlighted System 1’s fourth-quarter performance, which exceeded expectations thanks to lower operating expenses resulting from cost-cutting initiatives implemented throughout the year.
In the fourth quarter, System 1 reported revenue of $96.1 million, adjusted gross profit of $37.5 million, and adjusted EBITDA of $10 million, up 23% quarter-over-quarter. These figures have been bolstered by the company’s efforts to streamline operations in response to economic challenges.
Despite positive fourth quarter results, System 1 management refrained from providing full-year guidance for 2024. The decision was attributed to the ongoing uncertainty of the macroeconomic landscape and a weak advertising market that has yet to show signs of definitive recovery.
Looking ahead to the first quarter of 2024, System 1 management has provided guidance that it expects revenue in the range of $83 million to $84 million, with adjusted gross profit expected in the range of $28 million to $30 million. Notably, the company expects negative adjusted EBITDA of between $2 million and $1 million for the quarter, marking the first example of such guidance.
The revised price target and retained rating reflect the analyst’s view of System 1’s financial health and future prospects, taking into account both recent performance improvements and the challenges posed by the current economic environment.
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