Nexxen Shares Surge on Raymond James Upgrade to Outperform

Nexxen International (NASDAQ: NEXN) has gained momentum this month after Raymond James analyst Andrew Marok upgraded the stock to Outperform with a $15 price target, marking a significant shift in sentiment toward the digital advertising firm. The upgrade, announced on May 5, 2025, follows a series of strategic moves by Nexxen, including aggressive share repurchases and plans to expand its AI-driven advertising platform. Here’s why investors are taking notice.

The Upgrade: A Bullish Reassessment

Marok’s upgrade from Market Perform to Outperform highlights Nexxen’s growing competitiveness in the digital advertising space. The $15 price target represents a 71% upside from the April 2025 share repurchase price of $8.74, reflecting confidence in the company’s ability to capitalize on industry trends. Raymond James’ stance aligns with Nexxen’s own projections, including a $380 million contribution ex-TAC (traffic acquisition costs) target for 2025 and $125 million in adjusted EBITDA, up from $105 million in 2024.

The analyst’s bullish call underscores Nexxen’s end-to-end platform strategy, which integrates its demand-side platform (DSP), supply-side platform (SSP), and Nexxen Data Platform. This stack enables advertisers to manage campaigns across TV, digital, and connected TV (CTV), a critical advantage as ad budgets shift away from linear TV.

Key Drivers of Growth

1. CTV Dominance: Nexxen’s CTV revenue surged 86% year-over-year in Q4 2024, driven by partnerships with CTV OEMs like LG and its proprietary VIDAA audience measurement data. With CTV ad spend expected to grow 15% annually through 2027, Nexxen’s position is well-timed.
2. AI Integration: The company plans to roll out generative AI tools in 2025 for its DSP, creative studio, and data platform, aiming to simplify workflows and boost targeting precision. Early adopters of AI in ad tech, like The Trade Desk, have seen significant revenue growth, suggesting Nexxen could follow suit.
3. Share Repurchases: Nexxen’s $50 million repurchase program (with $39 million remaining as of April 30) signals confidence in its valuation. The buybacks could reduce shares outstanding by ~6%, boosting EPS and potentially attracting yield-focused investors.

The Risks

While the outlook is optimistic, challenges remain:
- Addressability Concerns: Nexxen’s reliance on third-party cookies and device IDs faces regulatory headwinds. Its shift to first-party data and open measurement frameworks (e.g., the Nexxen Data Platform) aims to mitigate risks, but execution is critical.
- Competitor Replication: Larger peers like Google and Amazon may replicate Nexxen’s AI and CTV strategies, compressing margins.
- Economic Sensitivity: Ad spend could falter in a recession, though CTV’s resilience and political ad tailwinds (e.g., U.S. elections) offer some stability.

Conclusion: A Buy with Catalysts Ahead

Nexxen’s $15 price target implies a compelling risk-reward profile, especially if it executes on its AI and CTV roadmap. With $187 million in cash (no long-term debt) and a flexible capital allocation strategy, the company is positioned to grow organically while repurchasing shares at depressed valuations.

Raymond James’ upgrade isn’t just about the stock’s potential—it’s a vote of confidence in Nexxen’s platform differentiation and its ability to navigate a shifting ad tech landscape. For investors, the $15 target isn’t just a number; it’s a milestone that could validate Nexxen’s transition into a category-defining player in the $500 billion digital advertising market.

Bottom line: Nexxen’s upgrade reflects its growing clout in CTV and AI-driven ad tech. Investors who bet on its execution could see significant gains—if the market buys in.