IAC/InterActive Corp (NASDAQ: IAC) has a path to a $2-3-billion valuation, according to Guggenheim.
Guggenheim analyst Jake Fuller maintains a Neutral rating on IAC/Interactive.
Although ANGI Homeservices Inc (NASDAQ: ANGI) investments are headwinds, the IAC portfolio as a whole continues to perform well, and visibility on a sum-of-the-parts argument is improving, Fuller said in a Monday note.
“While ANGI came up short in the quarter, Match Group Inc (NASDAQ: MTCH) turned in solid results and IAC’s portfolio of wholly owned businesses exceeded expectations,” the analyst said.
Guggenheim said that while its 2019 EBITDA estimate is down after factoring in ANGI, the sell-side firm continues to see healthy growth at Vimeo and strong profit contributions from Dotdash and applications.
“With greater financial disclosure around Vimeo and Dotdash, as well as healthy underlying trends across the portfolio of wholly owned assets, comfort in the SOTP case for IAC is up.”
While Guggenheim historically assigned a value of around $900 million for IAC’s wholly-owned assets, a path to a $2-3-billion valuation is taking shape due to favorable trends and increased disclosure, Fuller said.
The analyst isn't quite ready to take a bullish stance.
“At or below the midpoint of the $2-3 billion range would not leave us with enough upside potential to justify a Buy rating," he said. "The high end would be enough, but we need to see more to get comfort in the sustainability of topline growth (Vimeo, Dotdash) and margin levels (Dotdash, Applications)."
IAC/Interactive shares were down 0.27 percent at $220.95 at the time of publication Tuesday.
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