Opera (OPRA) may not be the most recognized name in the technology sector, but its recent performance and promising growth outlook suggest it could be a hidden gem for investors. Despite facing some pressure at the start of 2025, Opera’s stock has delivered a solid 38% gain since the beginning of 2024, significantly outperforming the Nasdaq-100 Technology Sector index, which only rose by 10% during the same period. Analysts have set a 12-month median price target of $26 for Opera, indicating a potential upside of 48% from current levels.
This optimism is fueled by the company’s robust growth in advertising and search businesses, its expanding user base, and its attractive valuation relative to industry standards.
Strong Growth in Advertising and Search Businesses
Opera has been making significant strides with its programmatic advertising platform, which enables brands and advertisers to target audiences across multiple channels, including desktop, mobile, connected television, audio, and video. The demand for programmatic advertising services is projected to grow at an annual rate of 27% through 2034, providing a strong tailwind for Opera’s ad business.
The company’s Q4 2024 results underscored its growth potential, reporting a 29% year-over-year increase in revenue to $146 million, which exceeded its annual growth rate by eight percentage points. Opera’s earnings per share also rose by 21% to $0.96 during the same period. The advertising segment, which contributes nearly two-thirds of the company’s revenue, continues to thrive as advertisers leverage opportunities on Opera’s browsers through speed dials and sponsored content.
Additionally, Opera has established long-term partnerships with search engine giants like Google and Yandex. These collaborations generate a steady stream of revenue from searches conducted via Opera’s native search bar, further bolstering its financial performance.
Expanding User Base and Increasing Revenue per User
Opera’s ability to attract and retain users has been a key factor in its growth story. By the end of Q4 2024, the company reported 296 million monthly active users (MAUs), highlighting its extensive reach in the market. More importantly, Opera is not just growing its user base but also enhancing the profitability of each user.
The average revenue per user (ARPU) witnessed an impressive 37% year-over-year jump in the fourth quarter, signaling that the company is successfully converting its user growth into higher revenue. This improvement is attributed to a rising number of high-paying customers who are increasingly engaging with Opera’s advertising and search services.
Opera’s management remains optimistic about sustaining this growth momentum. The company’s guidance for the current quarter projects a 29% increase in revenue, while full-year revenue is expected to grow by 17%. This positive outlook has led analysts to raise their growth expectations for Opera in 2025 and beyond, anticipating continued double-digit growth rates.
Attractive Valuation Compared to Industry Peers
In addition to its strong growth prospects, Opera’s valuation seems attractive when evaluated against broader market standards. The stock’s price-to-sales ratio stands at 3.5, which is relatively modest considering the S&P 500 index’s average ratio of 3. Furthermore, Opera’s trailing earnings multiple of 20 is lower than the S&P 500’s average of 24, suggesting that the stock’s current price may not fully reflect its earnings potential.
This attractive valuation, combined with the company’s consistent growth, positions Opera as a compelling choice for investors seeking a high-growth stock at a reasonable price. The continued expansion of its advertising and search businesses, supported by a growing user base and rising ARPU, enhances the likelihood of the stock achieving the 48% upside forecasted by analysts.
A Promising Opportunity for Investors
Opera’s strong performance in 2024, coupled with its optimistic growth projections for the current year, makes it a noteworthy contender in the tech sector. The company’s successful advertising and search partnerships, expanding user base, and attractive valuation offer a promising outlook for investors.
With analysts forecasting a 48% increase in Opera’s stock value within the next year, those seeking a growth stock at an attractive valuation might find Opera a compelling choice for their portfolios. Should the company persist in outperforming its revenue projections and capitalize on the rising demand for programmatic advertising, it has the potential to generate significant returns for shareholders in the coming year.