Opera (OPRA +5.32%) may not be a household name in the technology industry, but the stock has delivered healthy gains of 38% since the beginning of 2024, outpacing the Nasdaq-100 Technology Sector index's 10% increase by a solid margin during this period.
The stock has been under pressure of late following a bright start to 2025. But there is a good chance it could regain its mojo following a recent development and deliver robust returns to investors over the next year.
Let's look at the reasons why investors looking to buy a growth stock trading at an attractive valuation can consider Opera for their portfolios.
NASDAQ: OPRA
Key Data Points
Opera's robust growth is here to stay
Opera offers a programmatic advertising platform to brands and advertisers, which allows them to target audiences across a variety of channels such as desktop, mobile, connected television, audio, and video. Demand for this service is forecast to increase at an annual pace of 27% through 2034, suggesting that Opera's ad business could keep clocking healthy growth for a long time to come.
On Feb. 27, the company released its fourth-quarter 2024 results, and the stock jumped nearly 4% the following day thanks to its better-than-expected numbers. The company, which is known for its eponymous web browser, delivered 29% year-over-year growth in revenue last quarter to $146 million, outpacing its annual revenue growth by eight percentage points.
This shows that Opera's growth trajectory is improving. The company ended the year with a 21% jump in earnings to $0.96 per share. Opera's healthy growth during the quarter and the year was driven by its advertising and search businesses. Advertisers can buy spots on the home page of Opera's browsers in the form of speed dials or post sponsored content, and it gets nearly two-thirds of its revenue from this segment.
The company's browsers also come with a native search bar. It has long-term partnerships with search engine giant Google as well as Yandex, and it gets a share of the revenue from the searches made through its browsers. The solid user base that Opera has built over time tells us why it is witnessing an improvement in revenue from both the search and advertising businesses.
The company ended the fourth quarter of 2024 with 296 million monthly active customers (MAUs). The good part is that the company is witnessing growth in the number of high-paying customers, leading to a solid improvement in its average revenue per user (ARPU) last quarter. Opera's ARPU jumped by an impressive 37% year over year in Q4.
What's more, Opera management's guidance for the current quarter and year suggests that the company will keep growing at a healthy clip. It is anticipating a 29% increase in revenue for the current quarter, while full-year revenue growth is expected to land at 17%. However, don't be surprised to see Opera exceeding its own estimates by the end of the year, considering it is targeting fast-growing markets such as programmatic advertising.
Not surprisingly, analysts have increased their revenue growth expectations from Opera for 2025 and the next couple of years, indicating the company is expected to sustain healthy double-digit growth rates going forward.
OPRA Revenue Estimates for Current Fiscal Year data by YCharts.
The stock offers an attractive valuation and potential upside
Opera stock's 12-month median price target of $26 by analysts suggests it could jump an impressive 48% from current levels. Opera is, indeed, capable of delivering such gains, considering the health of its advertising and search businesses.
Moreover, the stock is trading at just 3.5 times sales, which isn't all that expensive when we consider the S&P 500 index has a price-to-sales ratio of 3. Even the trailing earnings multiple of 20 is lower than the index's average reading of 24. So, Opera looks like a top growth stock to buy now thanks to its consistent growth, which may lead the market to reward it with a richer valuation and send its shares higher.
