RBC Capital cut its price objective on Ziff Davis Inc. (NASDAQ: ZD) to $40 from $50, maintaining an Outperform recommendation on the shares following a set of mixed fourth-quarter results that pushed the stock down about 13% to $25.71.
The quarter produced several divergent signals. Total revenue increased 3.5%, adjusted EBITDA margin reached 40.1% and adjusted earnings per share were $2.56. RBC noted that those metrics were all below consensus expectations. At the same time, Ziff Davis sustained a notably high gross profit margin of 86.1% over the past twelve months, underscoring persistent profitability at the gross level.
Cash generation was a positive for the period. Free cash flow outperformed forecasts by roughly $20.9 million during the quarter. That strength in cash flow underpins valuation commentary from RBC: shares trade at approximately 4.3 times calendar year 2027 estimated free cash flow, while the revised $40 price target corresponds to about 6.3 times estimated free cash flow.
RBC described the current risk-reward profile as attractive at prevailing price levels. Supplementing that view, InvestingPro analysis cited within the company update indicates a strong free cash flow yield of 22% and flags the stock as undervalued, noting that this data point is one of multiple analytical notes available to subscribers.
On the operational and strategic front, Ziff Davis continues to work with external advisors to evaluate potential value-creating opportunities, an initiative the company had previously disclosed during its third-quarter fiscal 2025 earnings discussion. Management has deferred providing fiscal 2026 guidance while this evaluation process is ongoing.
The company’s fourth-quarter 2025 results included an adjusted EPS of $2.56, missing the expected $2.71, and revenue of $406.7 million, below the $416.61 million consensus. Those misses were material for investors and contributed to the quarter’s stock weakness.
No recent information on mergers or acquisitions has been disclosed, and there have been no recent analyst upgrades or downgrades reported for the company. These items, together with the reported financials and the ongoing strategic review, represent the most recent publicly noted developments concerning Ziff Davis’s financial performance.
Clear summary: RBC trimmed its Ziff Davis price target to $40 from $50 but left an Outperform rating in place after mixed Q4 results that featured revenue and EPS misses alongside robust free cash flow and a high gross profit margin. Management has postponed fiscal 2026 guidance as it evaluates strategic options with external advisors.
- Key points - See list below for concise takeaways.
- Risks - See list below for principal uncertainties mentioned in the report.
Key points:
- RBC reduced its price target to $40 from $50 and maintained an Outperform rating, calling the risk-reward attractive at current prices.
- Ziff Davis reported mixed Q4 results: revenue rose 3.5%, adjusted EBITDA margin was 40.1%, and adjusted EPS was $2.56, all below consensus; gross profit margin remained high at 86.1% over the last twelve months.
- Free cash flow beat expectations by about $20.9 million; shares trade at roughly 4.3 times calendar year 2027 estimated free cash flow, and the new target implies about 6.3 times estimated free cash flow.
Risks and uncertainties:
- Deferred fiscal 2026 guidance increases short-term visibility risk for investors while management works through strategic evaluations with external advisors.
- Reported misses on EPS and revenue compared with consensus forecasts could continue to pressure investor sentiment and share price performance.
- The absence of recent M&A announcements or analyst upgrades/downgrades leaves the market with limited directional catalysts beyond operational results and the ongoing review.