B.Riley cuts Taboola stock price target on ad impression headwinds

B.Riley has reduced its price target on Taboola (NASDAQ:TBLA) shares to $5.00 from $6.00, while keeping a Buy rating on the stock. Taboola's shares are currently trading at $2.77, close to a 52-week low of $2.83. The firm noted that Taboola's third-quarter ex-TAC gross profit and adjusted EBITDA exceeded Street expectations and were near the high end of guidance.

However, the firm's fourth-quarter outlook fell short of consensus projections due to a decrease in ad impressions per page view. This decline is attributed to changing consumer behavior on publisher sites, as AI summaries and large language models alter content discovery. Despite this, page views across Taboola's publisher base remain stable.

To counteract the impact of fewer ad impressions, Taboola is pursuing strategies such as adding new publishers, increasing full-page monetization with partners, and tuck-ins. The company has lowered its fiscal 2026 and fiscal 2027 estimates. Taboola's stock is valued at 4.0 times its estimated adjusted EBITDA for fiscal 2027, and there is still approximately $90 million remaining under the existing repurchase authorization along with a new $200 million authorization.

InvestingPro analysis suggests the stock is undervalued, with a Fair Value of $4.85, indicating potential upside from its current price.