AcuityAds has clear momentum in 2019, Haywood analyst Pardeep Sangha says

On Tuesday, AcuityAds reported its Q4 and fiscal 2018 results. In the fourth quarter, the company posted Adjusted EBITDA of $3.3-million on revenue of $32.9-million, a topline that was up 118 per cent over the same period a year prior.

“We are incredibly pleased with the results Acuity achieved in Q4 and for the entire 2018 year,” CEO Tal Hayek said. “The investments we made and continue to make in our technology, product and people, combined with our industry-leading AI platform and the continued growth of the digital advertising market, have provided significant momentum for our Company. “We are continuing to see substantial growth into the first quarter of 2019 with both larger and longer term contracts. We believe this renewed growth is a testament to the outstanding execution of the entire Acuity team whose dedicated focus and commitment is one of our most valuable assets. We firmly believe that Acuity is stronger and in a better market position today than at any time in our history.”

Sangha says this quarter was the natural continuation of a reversal he saw months ago.

“We believe capital markets are finally starting to appreciate the strong rebound in Acuity’s business as the company’s share price is up 52.2 per cent YTD,” he says. “However, we believe Acuity is still undervalued given the strong growth outlook for Q1 and the rest of the year.”

In a research update to clients today, Sangha maintained his “Buy” rating and one-year price target of $3.25 on AcuityAds, implying a return of 86 per cent at the time of publication.

Sangha thinks AT will post Adjusted EBITDA of $9.5-million on revenue of $95.1-million in fiscal 2019. He expects those numbers will improve to EBITDA of $13.4-million on a topline of $109.9-million the following year.