ZipRecruiter, Inc ZIP stock is trading lower as Sheridan downgraded the stock from Buy to Neutral and a $15 price target.
He noted a more balanced risk-reward skew in the equity following a >20% increase in the company’s share price since its last third-quarter earnings results in early November.
While several long-term themes remain intact in favor of the company, the analyst expected short-term headwinds (primarily driven by the broader macro environment) over the near-to-medium term) to persist into 2024.
With limited visibility into the overall hiring environment, Sheridan cut his revenue assumptions (mainly in the form of lower quarterly paid employers).
Given management’s ability to scale back on marketing spend in a weak operating environment, he did not change his operating margins at this time.
In the longer term, the analyst noted ZIP is well-positioned as a continued shift towards online recruiting acting as a tailwind to ZipRecruiter, advanced matching algorithms competitively position ZipRecruiter in a fragmented marketplace, and strong unit economics with rising spend per employer cohort over time.
However, in the near-to-medium term, he expected short-term headwinds (primarily driven by the broader macro environment) to persist into 2024.
The analyst projected fourth-quarter revenue and EPS of $125 million (vs. consensus of $128 million) and $0.06 (vs. consensus of $0.07).
Price Actions: ZIP shares traded lower by 2.00% at $14.25 on the last check Friday.
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