William Blair analyst Stephen Sheldon has reiterated their neutral stance on LZ stock, giving a Hold rating today.
Stephen Sheldon has given his Hold rating due to a combination of factors that reflect both positive and negative aspects of LegalZoom’s recent performance and future outlook. The company’s fourth-quarter results showed some positive signs, such as revenue and adjusted EBITDA figures that exceeded expectations, and a notable increase in free cash flow. However, these positives are tempered by challenges, including a decline in market share and a decrease in overall formations.
Despite these challenges, management’s guidance for 2025 suggests potential for improvement, with expectations for revenue growth and adjusted EBITDA margins that surpass prior consensus. The anticipated reacceleration in subscription revenue growth and the strategic shift to partnerships for tax services indicate potential for future growth. However, the impact of macroeconomic factors and the discontinuation of certain services present uncertainties, leading to a cautious outlook reflected in the Hold rating.