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Rover Group (NASDAQ:ROVR) stock jumped to a double-digit percentage gain after posting stronger than anticipated Q4 earnings and cruising past expectations for bookings.
The company notched $0.03 in earnings per share, surprising analysts that had expected the company to break even. Meanwhile, a 36.7% jump in revenue to $51.95M narrowly exceeded expectations and 31% gross bookings volume growth to $218.1M smashed expectations at $166M.
While the company forecast macro headwinds negatively impacting the business in 2023, leading to a below consensus revenue guide, analysts remained confident.
“The stock trades at 2.3 times our 2023 EV/revenue estimate, compared to the broader marketplace comparable company group at 2.6 times,” William Blair analyst Ralph Schackart told clients. “While the macro remains challenging, we believe Rover offers a differentiated marketplace and its model should scale with continued growth.”
He retained an Outperform rating on the stock. Likewise, analysts at both Stifel and JMP Securities retained bullish ratings on the stock, with confidence bolstered by the strong bookings report and continued resilience of the travel industry.
Stifel analyst Lamont Williams indicated that guidance was appropriately conservative given risks into 2023.
“We note Rover exceeded its revenue guidance in each quarter in FY:22. In addition, the company reiterated its long-term outlook for revenue growth in the 20-25% range and an adj. EBITDA margin of 30%+,” he told clients. “Rover has a number of levers to drive growth in the years ahead including new product offerings, entry into new geographies, and expansion of strategic partnerships and incremental revenue is showing healthy flow through supporting margin expansion. The backdrop for the pet industry remains attractive and as the leading marketplace for pet services, Rover is well positioned.”
He assigned a $7 price target to the stock while his peers at JMP Securities assigned a $6 target.
Shares of the Seattle-based online pet care marketplace rose 12.4% in afternoon trading on Tuesday.
Read the earnings call transcript.
