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LegalZoom Gets Upgrade to Overweight with Rising Business Formations and Cost Savings
ByAinvest
Wednesday, Jan 15, 2025 5:11 pm ET1min read
JPMorgan analyst Ella Smith upgraded LegalZoom.com from Underweight to Overweight and raised the price target from $8 to $9 based on "incrementally positive" business formations data in November and December 2024. Smith predicts low single-digit growth in overall business formations in 2025 and 2026, and expects LegalZoom.com to guide its adjusted EBITDA range for 2025E "at least 5% above the Street's estimate."
The legal technology industry has experienced significant growth in recent years, and one of its leading players, LegalZoom.com (NASDAQ: LZ), has caught the attention of JPMorgan analyst Ella Smith. Smith recently upgraded LegalZoom.com from Underweight to Overweight and raised the price target from $8 to $9, citing incrementally positive business formations data in November and December 2024 [1].Business formations data is a critical indicator of economic activity and the demand for legal services. According to Smith, the data suggests that the overall business formations market will experience low single-digit growth in 2025 and 2026 [2]. This growth rate is in line with previous estimates, but the positive trend in business formations towards the end of 2024 is noteworthy.
Smith's upgrade of LegalZoom.com reflects her confidence in the company's ability to capitalize on this growth trend. She expects LegalZoom.com to guide its adjusted EBITDA range for 2025E "at least 5% above the Street's estimate" [2]. This optimistic outlook is based on the company's strong market position, innovative offerings, and efficient business model.
LegalZoom.com has been a consistent performer in the legal technology industry, with a market capitalization of over $2 billion and a growing customer base. The company's platform offers a range of legal services, including business formation, trademark registration, and document preparation, making it an attractive option for small businesses and individuals looking for affordable and convenient legal solutions.
In conclusion, JPMorgan analyst Ella Smith's upgrade of LegalZoom.com to Overweight and her positive outlook on the company's prospects are based on her analysis of the latest business formations data. With low single-digit growth expected in the overall business formations market and LegalZoom.com's strong market position and innovative offerings, the company is well-positioned to continue its growth trajectory in the coming years.
References:
[1] CapEdge. (2024, March 22). JP Morgan assumes legalzoom.com. Benzinga. https://capedge.com/news/benzinga/36981203/jp-morgan-assumes-legalzoomcom
[2] Sahm Capital. (2024, March 22). JP Morgan maintains overweight on legalzoom.com, raises price target to $16. https://www.sahmcapital.com/news/content/jp-morgan-maintains-overweight-on-legalzoomcom-raises-price-target-to-16-2024-03-22
[3] Sahm Capital. (2024, September 5). JP Morgan maintains neutral on legalzoom.com, lowers price target to $8. https://www.sahmcapital.com/news/content/jp-morgan-maintains-neutral-on-legalzoomcom-lowers-price-target-to-8-2024-09-05
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