AcuityAds is still undervalued, says Paradigm Capital

The acquisition of Visible Measures is the most recent development that will allow AcuityAds (AcuityAds Stock Quote, Chart, News: TSXV:AT) to continue to aggressively expand its business, says Paradigm Capital analyst Kevin Krishnaratne.

On March 31, AcuityAds closed the acquisition of Boston-based programmatic platform provider Visible Measures Corp. for approximately (U.S.) $10-million.

“We are extremely excited about the integration of Visible Measures’ video analytics technology into Acuity’s world-class media execution platform and are looking forward to seeing the compelling advantages of offering their services to our existing clients,” said AcuityAds CEO Tal Hayek. “Video advertising is the fastest-growing segment of the digital advertising market, and the addition of Visible Measures’ offerings significantly bolsters our video footprint and enhances our value proposition for marketers as an industry-leading multichannel platform for all of their digital advertising initiatives.”

Krishnaratne says the acquisition keeps AcuityAds on the bleeding edge of programmatic ad technology.

“Video as an advertising medium continues to grow, and measuring how consumers view and share video is increasing in complexity,” he says. “Visible Measures offers a standardized metric, known as “True Reach”, which measures how many consumers have spent time watching a video advertisment. The standard has been approved by the Media Rating Council (MRC) and is a metric used by CMOs to understand the virality of a video. We think AcuityAds can leverage these newly acquired tools into its own leading DSP to better place video ads and drive ROI higher for its clients.”

In a research update to clients today, Krishnaratne maintained his “Buy” rating and one-yea price target of $6.00 on AcuityAds, implying a return of 43 per cent at the time of publication, including dividend.

Krishnaratne thinks AcuityAds will post EBITDA of $4.9-million on revenue of $80.3-million in fiscal 2017. He expects these numbers will improve to EBITDA of $9.1-milion on a topline of $105.5-million the following year.