Ibotta's (IBTA) planned transition to a new performance marketing model faces an uncertain timeline considering a pullback in consumer packaged goods' budgets and "tough industry conditions constraining promotional supply," BofA said in a note Thursday.

The investment firm downgraded the mobile technology company's stock to underperform from neutral and slashed its price target to $24 from $57 after the company reported lower Q2 results and issued Q3 revenue guidance below analysts expectations.

BofA also said the downgrade was due to the uncertain timeline of the transition, which the company sees as a "key growth driver."

Ibotta reported Q2 adjusted net income late Wednesday of $0.49 per diluted share, down from $0.68 a year earlier. Revenue for the quarter ended June 30 was $86 million, down from $87.9 million a year earlier.

For Q3, the company said it expects revenue of $79 million to $85 million. Analysts polled by FactSet are looking for $101.8 million.

A key factor that affected the company's weaker-than-expected Q2 results was the decision by two clients to pause spending on a new performance marketing model after allocating higher budgets initially, BofA said.

BofA said it lowered Ibotta's 2025 revenue and EBITDA estimates by 10% and 38%, respectively, and now projects a 1% decline in revenue for 2026.

Shares of Ibotta were down more than 28% in recent Thursday trading.

Price: 24.19, Change: -9.69, Percent Change: -28.60