Digital advertising company AcuityAds Holdings (AcuityAds Stock Quote, Chart TSXV:AT) is in the right place at the right time, says analyst Rob Goff of Echelon Wealth Partners, who argues that secular growth in the programmatic ad industry supports his reiterated “Speculative Buy” rating and $2.30 target price for AT.
On Thursday, Goff released a client update on AcuityAds, pointing to a number of factors relevant to the growing market served by AT’s programmatic platform, including that almost 80 per cent of programmatic ad spend will go to mobile ads in 2019, that Canada is projected to surpass $1 billion in mobile ad spend for the first time in 2019 (an 18 per cent year-over-year increase) and that the Asian-Pacific market for digital and video ads will be worth US$19 billion by 2020, with programmatic ads taking 36 per cent of the market.
“We maintain our bullish view on AT’s strategic positioning in a high-growth vertical where the Company is moving rapidly to gain significant economies of scale with game- changing additions to its sales/distribution capabilities,” says Goff.
“The rapid migration of traditional advertising to the digital ecosystem is changing paradigms where legacy TV is seen as the ‘Holy Grail’ by many,” he says. “On this front, AT is well positioned by its 2017 acquisition of Visible measures where it was actively involved in video placements, mobile, and is particularly strong in video audience measurement through its TrueReach.org platform, frequently referenced by the industry leading publications included AdAge.”
Goff sees AcuityAds generating Adjusted EBITDA in its 2019 of $8.2 million on revenue of $82.3 million and Adjusted EBITDA in fiscal 2020 of $10.9 million on a top line of $98.6 million. His $2.30 target represented a projected 12-month return of 94.9 per cent at the time of publication.