RBC Capital Markets is sticking with its cautious stance on Angi Inc. even after the company's second-quarter results disappointed. The Canadian bank kept its "sector perform" rating and $5 price target on the home-services marketplace, but it did trim its financial forecasts following the softer-than-expected quarter.
For everyday investors, the key takeaway is that RBC sees Angi's AI-driven turnaround as a long-term project that will take more time to bear fruit. The bank's decision to hold its rating and target suggests it isn't ready to call the stock a buy, but it also isn't abandoning hope.
What happened in Q2?
Angi, which operates popular platforms like Angi and HomeAdvisor, connects homeowners with local service professionals for everything from plumbing to roofing. The company has been investing heavily in artificial intelligence to improve matching, streamline operations, and boost customer experience. However, those investments have yet to translate into stronger financial results.
The company's second-quarter numbers came in below Wall Street's expectations, prompting RBC to lower its estimates. While the brief doesn't specify the exact figures, the pattern is familiar: a company in the middle of a digital transformation often sees short-term pain before potential long-term gains.
RBC's "sector perform" rating is essentially a neutral call — it means the bank expects the stock to perform in line with its sector over the next 12 months. The $5 price target, meanwhile, signals that RBC sees limited upside from current levels, though it also implies no major downside risk.
Why the AI bet matters
Angi's AI push is part of a broader industry trend. Many companies are racing to integrate artificial intelligence into their operations, hoping to cut costs, improve efficiency, and gain a competitive edge. For Angi, AI could help match customers with the right professionals more accurately, reduce response times, and even predict demand patterns.
But AI transformations rarely happen overnight. They require significant upfront investment, and the payoff often comes later. RBC's commentary suggests that Angi's AI initiatives are still in the "early innings," meaning investors shouldn't expect immediate results.
This isn't unique to Angi. Across the market, companies are grappling with how to turn AI hype into real profits. Some, like DeepSeek's recent price hikes, are adjusting their strategies as they learn what the market will bear. Others, like Ooredoo's $800 million bet on AI cloud capacity, are making massive bets on the technology's future.
What it means for investors
For those holding Angi shares, the message is one of patience. RBC's decision to maintain its rating and price target suggests the bank believes the stock is fairly valued at current levels, but that the AI story hasn't yet delivered the goods.
Investors should also consider the broader context. Angi operates in the home-services sector, which is sensitive to housing market conditions and consumer spending. If the housing market weakens or homeowners tighten their belts, Angi could face headwinds regardless of its AI efforts.
RBC's forecast cuts are a warning sign that the company's near-term prospects have dimmed. However, the fact that the bank didn't downgrade the stock or slash its price target suggests it sees the current struggles as temporary.
For those considering a position, it's worth noting that "sector perform" is not a ringing endorsement. It's a "hold" in plain English. The bank is essentially saying: wait and see.
Looking ahead
The next few quarters will be crucial for Angi. Investors will be watching to see whether the AI investments start to show up in the numbers — whether that's through higher revenue, better margins, or improved customer retention.
RBC's stance is a reminder that not every AI story is an instant winner. While some companies are seeing immediate benefits, others are still laying the groundwork. For Angi, the promise of AI is real, but the payoff may take longer than some hoped.
In the meantime, investors should keep an eye on the company's earnings calls and any updates on its AI initiatives. The stock's performance will likely hinge on whether management can convince the market that the turnaround is on track.
As always, it's important to remember that analyst ratings are just one piece of the puzzle. They reflect one firm's view, not a guarantee of future performance. Doing your own research and understanding the risks is essential.
For more on how companies are navigating the AI landscape, check out our coverage of Shift4's profit outlook miss and Howmet's raised targets.
