AcuityAds gets price target raise at Paradigm Capital

On Wednesday, AcuityAds provided preliminary fourth quarter results in which management said it expected revenue of $32.5-million, with 10 per cent EBITDA margins.

“We are incredibly pleased with our results in the fourth quarter and our overall performance in 2018. We achieved significant revenue growth and meaningful positive adjusted EBITDA, which is further proof of the success of our industry-leading technology, continued investments in our team and the strategic acquisitions completed throughout the year,” CEO Tal Hayek said. “In addition, the first quarter, which is seasonally the slowest quarter of the year, is starting off with strong year-over-year growth and positive momentum.”

Krishnaratne says this may signal a return to form for AT, whose stock has flagged since midway through 2017.

“Acuity announced much better-than-expected Q4 results that beat both our estimates and the Street’s,” the analyst notes. “We will await official Q4 results in March that we expect should show continued strength in the company’s self-service and managed-service businesses. Management also noted it is seeing a strong start to Q1, which is a positive given how the quarter is the seasonally slowest for the industry. We have increased our 2019 forecast slightly to account for the strong Q4 outperformance, and look forward to commentary in March on bookings to date that may help support further increases.”

In a research update to clients today, Krishnaratne maintained his “Buy” rating, but raised his one-year price target on AT from $1.75 to $2.00, implying a return of 40.8 per cent at the time of publication.

Krishnaratne thinks AcuityAds will generate EBITDA of $2.7-million on net revenue of $36.1-million in fiscal 2018. He expects those numbers will improve to EBITDA of $10.0-million on net revenue of $48.4-million in fiscal 2019.