JP Morgan analyst Neeraj S Kookada reiterated the Neutral rating on ZipRecruiter, Inc. ZIP, lowering the price forecast to $8 from $9.
Yesterday, the company reported fourth-quarter results, with quarterly sales of $111 million, outpacing the street view of $107.73 million.
ZipRecruiter expects first-quarter revenue between $107 million and $111 million and aims for year-over-year revenue growth by the fourth quarter of 2025 if hiring activity improves.
The analyst notes that ZipRecruiter is facing macro pressures and cautious employer hiring, impacting its top-line growth.
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After 28 months of year-over-year hiring declines in the U.S., ZipRecruiter is cautiously optimistic about 2025, as positive trends in employer sentiment and account reactivations suggest a potential labor market recovery, the analyst writes.
Long-term benefits are expected from investments like Phil, the personalized AI recruiter, and the shift to online recruitment, Kookada writes.
As a third player in the U.S. online recruiting market, the analyst seeks faster growth (over 20%) and improved adjusted EBITDA margins, targeting 30% in the long run.
Additionally, expanding ZipRecruiter’s reach to capture more of the recruitment market is crucial.
Therefore, the analyst sees the risk-reward as balanced at current levels.
Kookada revises fiscal year 2025 and fiscal year 2026 revenue projections to $456 million (down 4% year-over-year) and $487 million (up 7% year-over-year), increasing forecasts by around 3% each.
The analyst is optimistic about positive quarter-to-date trends, product improvements, and job seeker market share gains, with total web traffic growing 15% year-over-year, outpacing peers by over 10%.
However, Kookada remains neutral due to ongoing demand challenges and macroeconomic uncertainty.
Price Action: ZIP shares are trading lower by 17.20% to $5.57 at last check Wednesday.
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