Yesterday, Toronto-based programmatic ad player Chango was acquired by Playa Vista, California-based digital advertising company Rubicon Project (NYSE: RUBI) in a deal valued at (U.S.) $122 million in cash and stock (approximately (C)$155-million).
“Chango’s technology brings keyword, contextual targeting and retargeting to premium display, mobile and video advertising. This will enable us to bring intent marketing budgets to an independent, open marketplace that serves premium buyers and sellers at scale for the first time,” explained Rubicon CEO Frank Addante.
Churchill says the valuation was done at 3x Chango’s trailing revenue number of an estimated (U.S.) $47-49-million. He thinks this valuation makes Acuity, which he describes as “very similar” to Chango, look cheap by comparison.
“With AcuityAds trading at 1.7x trailing and 1.3x forward revenue, the take-out valuation for Chango reinforces our view that AcuityAds is undervalued at current levels. Consolidation in the AdTech market continues at a very fast pace, and we believe this is the eventual end game for AcuityAds as its scale its business,” said Churchill.
In a research update to clients this morning, Churchill maintained his “Speculative Buy” rating and $1.80 target price on AcuityAds, implying a return of 82% at the time of publication.