UBS Analyst Initiates Coverage on Fiverr International Ltd (FVRR)
UBS analyst Kunal Madhukar has initiated coverage on Fiverr International Ltd (FVRR) with a Buy rating and a price target of $33. Madhukar believes that Fiverr’s volumes lead overall job listings by two or more quarters, and job listings have started stabilizing.
Optimistic Outlook for 2024
Despite the uncertain macro environment, Madhukar sees an upward trend in expectations and multiples as the outlook for Fiverr firms up in 2024. Expectations are currently low, providing significant upside potential from the current share prices.
Comparison with Upwork Inc (UPWK)
Madhukar compares Fiverr’s valuation multiple to that of Upwork Inc (UPWK), which historically traded at a discount to FVRR. Despite assuming lower than seasonal GMV trends, flat take rates, and flat gross margins, there is still significant upside for Fiverr.
Reaccelerating Growth in 2024
UBS economists project a modest decline in GDP for the last quarter of 2023 and the first quarter of 2024, followed by growth starting in the second quarter of 2024. Madhukar expects growth to reaccelerate in 2024, albeit at levels below historical seasonality through 2025.
Valuation and Analysis
Madhukar values Fiverr shares using a ~3x multiple on 2025 estimated gross profits, which is consistent with the multiple used for UPWK. However, this multiple is lower than the average during the pre and post-COVID periods.
Fiverr’s shares closed higher by 2.44% at $24.75 on Wednesday, reflecting the positive sentiment surrounding the company’s future prospects.