Needham analysts adjusted their price target on Vacasa (NASDAQ:VCSA) to $8 from $10, while maintaining a Buy rating on the stock. This decision follows Vacasa’s Q1 earnings report, which resulted in a share price drop of more than 8% pre-market today.
The analysts noted that the results continued the company’s trend of a challenged top line accompanied by a focus on cost-cutting measures. As a result of these trends, the analysts significantly reduced their revenue projections, leading to lower adjusted EBITDA estimates for 2024. However, they expect improvements in 2025 due to the full-year benefits of the cost-cutting strategies.
Despite the tough demand environment that Vacasa is navigating, the analysts believe the company’s emphasis on reducing costs is appropriate, although it substantially increases the uncertainty of their forecasts. They pointed out that the stock is currently trading at an attractive 5 times their adjusted EBITDA estimate for 2025, but they also cautioned that the risk-reward balance remains wide, reflecting the stock’s depressed valuation amid these challenges.