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ZipRecruiter Rises; Analysts See AI Streamlining Hiring Process

A number of analysts initiated coverage of ZipRecruiter. One says it's 'well positioned to benefit from the move in recruitment spend online.'

ZipRecruiter  (ZIP) - Get Report rose Monday after several analysts initiated coverage of the online job site, with some suggesting that the company's artificial-intelligence-driven system could make the hiring process more efficient.

Shares of the Santa Monica, Calif., company, which began trading publicly last month, at last check were up 8.2% to $23.

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"As a leading job recruiting site, ZIP is well positioned to benefit from the move in recruitment spend online," said Goldman Sachs Michael Ng, who initiated coverage with a buy rating and a 12-month target price of $28.  

Ng said in a research note that the company "should be able to disrupt the traditional recruiting market by streamlining the hiring process for employers and personalizing the online search experience for job seekers."

Evercore ISI analyst Mark Mahaney initiated coverage of ZipRecruiter with an outperform rating and a $31 share price target.

"We view ZipRecruiter as a differentiated player (based on its artificial-intelligence-first approach to employer-employee matchmaking) in the large U.S. recruitment market that is likely to materially benefit from several tailwinds (secular, macro and structural) going forward," he said.

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ZipRecruiter, Mahaney added, "plays an active rather than a passive role in recruitment, whereas larger incumbents, Indeed RCRUY and LinkedIn  (MSFT) - Get Report, are indirect competitors and a source of job leads."

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Raymond James analyst Aaron Kessler kicked off his coverage of ZipRecruiter with a strong buy and $36 price target.

Kessler cited several factors, including a large recruitment total addressable market that is increasingly shifting online, a leadership position with strong brand recognition driving strong organic traffic, and artificial-intelligence-powered matching technology that drives better outcomes for employers and job seekers.

Taking a more conservative approach is Doug Anmuth, analyst with J.P. Morgan, who initiated coverage of ZipRecruiter with a neutral rating and $24 price target. 

The analyst says ZipRecruiter is well positioned to benefit near-term from "strong" demand for talent during the recovery and in the long term from a shift in recruitment spending to online channels. 

But Anmuth said he would like to see faster growth and says the stock's risk/reward proposition is balanced at current levels.

The U.S. economy added nearly a million private sector jobs in May, ADP said earlier this month.