AcuityAds (AcuityAds Stock Quote, Chart, News TSX:AT) has been on fire lately but there’s likely more where that came from, says Echelon Wealth Partners analyst Rob Goff, who delivered a report to clients on the company on Tuesday.
Digital advertising and analytics company AcuityAds announced on Tuesday an update on the launch of its self-service platform set to debut on October 1, saying the platform has been in beta testing with six established brands including a Fortune 50 home renovation retailer, a US insurance group and a large direct-to-consumer mattress company.
AcuityAds reported participants said the new technology simplified their campaign creation process, generated data-driven analytics and improved return on investment.
“We are proud to be presenting our new advertising automation platform, a disruptive development within the industry that will democratize programmatic advertising, making it accessible to all marketers,” said Tal Hayek, Co-Founder and CEO of AcuityAds, in a press release. “With this new technology, we will bring the consumer journey to life by closing the gap between the way advertising is planned and the way it is executed.”
Goff said the new platform should gain traction by meeting the trend of major brands to develop in-house programmatic marketing campaigns.
“We believe that the product launch will accelerate self-service revenue growth gaining contracts from brands intending to operate their ad campaigns internally. The product launch is strengthened by the inclination of companies to protect their brands by running ad campaigns internally for greater control while they are also focused on improved ROI with marketing budgets in a COVID-19 environment under greater scrutiny,” Goff wrote.
“Furthermore, we are encouraged by the recent update by the management that highlighted a $10.0-million 2020 ad campaign project from the client who had spent $4.5 million in 2019, and another one with only $0.09 million in 2018 to spend $3.6 million in 2020. The Company has seen a continued strengthening in the market with recent activity approaching pre-COVID levels,” Goff said.
AcuityAds’ share price went on a skid with the rest of the market in February and March but really picked it up from July onwards. Year-to-date, AT is now up 174 per cent.
Goff said AcuityAds could be in the mood for some M&A activity, as the company now has greater certainty in the recovery of its financials while the recovery in its share price, positive free cash flow and cash balance of $9.1 million at the end of the second quarter (along with access to an additional $16.9 million from its credit facilities) are all positive signs, in Goff’s mind.
“AT’s strengths are looking at a market where prospective targets often have greater financial pressures and limited access to growth capital to achieve scale,” Goff said.
The analyst has raised his full-year forecasts to $109.0 million in revenue and $10.9 million in EBITDA from the previous $95.9 million and $10.2 million, respectively. With the update, Goff has maintained his “Speculative Buy” rating but upped his target price from $2.80 to $4.50, which at press time represented a projected one-year return of 28.2 per cent.