Investment research firm Northland downgraded Similarweb Ltd. (NYSE: SMWB) to Market Perform from Outperform on Tuesday, cutting its price target to $5.00 from $14.00. The move followed the company’s fourth-quarter results and a fiscal 2026 outlook that Northland described as softer than expected. At the time of the note, the stock was trading at $3.90, having fallen 64% from its 52-week peak of $10.84.
Similarweb reported fourth-quarter 2025 revenue of $72.8 million, an 11% increase year-over-year but short of Northland’s $76.1 million projection. Non-GAAP EBIT rose to $3.4 million from $2.6 million a year earlier, marginally exceeding Northland’s $3.3 million forecast. The company’s gross profit margin remained high, at 79.55% according to InvestingPro data.
Management attributed the revenue shortfall primarily to the timing of two large language model (LLM) data training contracts that did not close in the fourth quarter but remain in the company’s pipeline. In addition to the contract timing, the company pointed to broader market weakness and execution shortfalls as contributors to the miss.
The quarter’s results also showed a non-GAAP earnings per share of $0.03, below the consensus estimate of $0.04. Revenue of $72.8 million fell outside the company’s previously stated guidance range of $75.2 million to $78.2 million and was nearly 5% below consensus expectations.
In response to the combined revenue miss and the softer fiscal 2026 guidance, Northland analyst Luke Horton lowered the firm’s view on the shares and trimmed the price target. Horton pointed to the timing issues around the LLM contracts and execution challenges when explaining the decision to move to a Market Perform rating.
Other sell-side firms also took actions after the report. Citizens downgraded the stock to Market Perform from Market Outperform, while Goldman Sachs lowered its rating to Neutral, citing concerns about the company’s ability to reaccelerate growth. Oppenheimer adjusted its price target down to $10.00 from $12.00 but kept an Outperform rating.
Despite the near-term revenue disappointment, analysts tracked by InvestingPro expect Similarweb to turn profitable for the full year, with a forecasted EPS of $0.08 for fiscal 2026. InvestingPro’s Fair Value assessment, noted in research summaries, indicates the stock may be undervalued at current levels.
Alongside the quarterly results, Similarweb announced two product and distribution developments. The company launched AI Studio, an enterprise intelligence solution that delivers digital market data through a conversational AI interface and ties into Similarweb’s existing digital intelligence platform. Separately, Similarweb made its digital performance data available through the Bloomberg Terminal, enabling subscribers to access near real-time metrics such as unique visitors and average visit duration for public companies’ digital properties.
The combination of product expansion and broader distribution comes amid an operating environment in which the company faces the immediate challenge of closing the delayed LLM training contracts and addressing execution gaps highlighted by management. The market has reacted to the earnings and guidance, and multiple brokerages adjusted ratings and targets accordingly.
What this means
- The company’s strong gross margin profile provides some cushion even as revenue growth slowed versus expectations.
- Timing of enterprise contracts tied to large language model training has an outsized effect on near-term results for Similarweb.
- Market and analyst reactions have been pronounced, with several firms lowering ratings or targets following the report.
Disclosure
No disclosure provided.