Is It Too Late To Consider Buying TechTarget, Inc. (NASDAQ:TTGT)?
While TechTarget, Inc. (NASDAQ:TTGT) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the NASDAQGM. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine TechTarget’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
See our latest analysis for TechTarget
What is TechTarget worth?
TechTarget appears to be overvalued by 38% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$48.48 on the market compared to my intrinsic value of $35.13. This means that the opportunity to buy TechTarget at a good price has disappeared! Another thing to keep in mind is that TechTarget’s share price is quite stable relative to the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will TechTarget generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by a double-digit 20% in the upcoming year, the short-term outlook is positive for TechTarget. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? TTGT’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TTGT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on TTGT for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for TTGT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about TechTarget as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 2 warning signs for TechTarget you should be aware of.
If you are no longer interested in TechTarget, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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