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Goldman Sachs: Newly Public Aurora Mobile Set To Gain Market Share

Hannah Genig

Goldman Sachs is out bullish on the newly public Chinese big data firm Aurora Mobile Limited - ADR (NASDAQ: JG), which provides analytics, messaging and sharing services to its clients. 

The Analyst

Goldman Sachs analyst Piyush Mubayi initiated coverage of Aurora Mobile with a Buy rating and $12 price target.

The Thesis

Aurora, also known as Jiguang, monetizes its business by purchasing ad inventory and reselling to advertisers, Mubayi said in the initiation note. (See the analyst's track record here.) 

“We expect Jiguang to continue to gain share in the online advertising market as its user targeting capability yields more efficient and impactful advertising relative to industry incumbents such as Tencent,” the analyst said. 

Mubayi named the following key growth drivers for Aurora: 

  • The addition of new and diversified advertisers.
  • Existing advertisers allocating a higher marketing budget to Jiguang.
  • Real-time and anonymous behavior data.
  • The use of AI and machine-based learning to create effective insight.
  • Standardization of existing products to shorten the development cycle.
  • Further improvement of gross margins through value chain aggregation.

Aurora's business plan holds many risks as well, Mubayi said: "Heavy media costs; intensifying competition in digital advertising and developer services; data leakages; privacy protection regulations; continued innovation in data monetization; and slower-than-expected growth in new customers numbers and ARPU." 

Price Action

Aurora Mobile shares were rising 0.67 percent to $5.99 at the time of publication Monday. 

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