AcuityAds gets price target raise at Echelon

An increasing focus on higher revenue potential clients has Echelon Wealth Partners analyst Rob Goff feeling bullish about AcuityAds (AcuityAds Stock Quote, Charty, News: TSXV:AT).

Yesterday, AcuityAds reported its Q1, 2016 results. The company lost $500,991 on revenue of $5.20-million, a 71 per cent topline increase over the same period last year.

“We are extremely pleased with our Q1 results particularly in a quarter that is traditionally weaker due to the seasonality of our industry,” stated Tal Hayek, chief executive officer of AcuityAds. “We continued to build on the strong momentum from 2015 and experienced significant growth in both our United States and our software-as-a-service-based self-service revenues, which grew 69 per cent and 352 per cent respectively year over year. This growth is attributed to the value our clients continue to derive from our programmatic platform to successfully enable their digital initiatives. This also validates our recently announced decision to expand our service offerings into the European market in Q2 to better serve our clients’ needs on a global level.”

Goff says AcuityAds Q1 results were in-line with his forecasts, but on the conference call to discuss the results he says he focused on what he feels is an important adjustment in the company’s business model.

“We found the more important read-throughs on the quarter were about the company’s focus on higher ARPU clients where it believes it has a competitive advantage and on building its Self Service platform where it would look to add new distribution channels including systems integrators, marketing firms and resellers,” notes the analyst. “The company further discussed opportunities to resell its DMP services. Any shift away from lower ARPU clients creates an opportunity for AcuityAds. The focus on Self Service provides yet another (perhaps now redundant) industry data point highlighting the demand for arguably AcuityAds’ strongest product. The move to resell its DMP product highlights the advantages of AcuityAds’ moves to partner with Adobe for its top-ranked DMP product. For the record, Adobe’s DMP is top-ranked by both Gartner and Forrester.”

In a research update to clients today, Goff maintained his “Buy” rating on AcuityAds, but raised his one-year price target from $2.00 to $2.10, implying a return of 64.1 per cent at the time of publication.