The average target price of ZDGE is 3.5 and suggests 56% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 3.5. This translates into 56% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 3.5. This suggests 56% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Zedge, Inc. operates a digital publishing and content platform worldwide. Its platform enables consumers to personalize their mobile devices with ringtones, home screen app icons, wallpapers, widgets, and notification sounds. The company was incorporated in 2008 and is based in New York, New York.

Zedge, Inc.

Communication Services

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

ZDGE reported revenue of USD 29mn in the last 12 months, up 4% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. Market expects EPS to reach USD 0.05 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 31ppts and its growth decelerated by 15ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -3.2% in the last 12 months, a decline from 14.6% in FY23. 

Historically, ZDGE has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -6.6%, a growth from -59.5% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to -6.3%, below the peers. The consensus estimate for FY25 for RoCE is -2.5%, again behind the peers. 

Zedge, Inc. reported a return on equity (RoE) of -6.6% in the last 12 months, down from -5.6% in FY24. The market consensus projects an RoE of -2.0% in FY25, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to -5.2% in the last 12 months, a decrease from -4.6% in FY24. The market analysts predict that RoA will be -1.6% in FY25, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -1.2 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

ZDGE has very poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and remains mildly favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note strong debt servicing capacity, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to slow historical revenue growth, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, ZDGE is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, ZDGE is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is slightly undervalued relative to its peers. Specifically, the stock is 'expensive' on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

Zedge, Inc.

$ 2.25

3

Zedge, Inc.

$ 2.25

3

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 2.25

About

About

Zedge, Inc.

$ 2.25

3

Zedge, Inc.

$ 2.25

3

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 2.25

About

About

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