UBS Revises Outlook On IAC, Parent Company Of Match And Angi Homeservices

IAC/InterActiveCorp IAC, an internet and media company whose well-known brands include HomeAdvisor and Tinder, offers investors a compelling risk-reward profile, according to UBS.

The Analyst

UBS' Eric Sheridan made the following changes:

InterActive was maintained at Buy with the price target lifted from $168 to $200.
ANGI Homeservices Inc. ANGI was initiated at Buy with a $20 price target.
Match Group Inc MTCH was downgraded from Buy to Neutral with a price target lifted from $42 to $48.

IAC: Four Reasons To Be Bullish

InterActive is among the most attractive stocks in the internet and media space for four reasons, Sheridan said in a research report:

The stock's valuation assigns "no value" to its publishing, apps and video businesses.
IAC has large upside potential with its Vimeo business, which Sheridan said holds a $15-billion long-term market opportunity. The company's balance sheet could be used for more strategic acquisitions or stock buybacks.
A faster-than-expected revenue growth profile at Angi Homeservices, where InterActive owns an 86.9-percent stake, could increase the value of its holdings.

Angi: Leader In Home Services

Angi Homeservices is a leader in the home services and home improvement category, and the company boasts a "strong strategic footing," Sheridan said in a separate note. Angi's positioning should allow the company to take advantage of two key secular themes that are emerging, the analyst said: a growing total addressable market for local services and a shift from offline to digital platforms like the company's core platform Angie's List.

Over the longer term, Angi's scale of service providers is similar to the scale seen in other "internet category winners," and its monetization profile is expected to expand from current levels, Sheridan said.

Match Group: 'Swiping Down'

Shares of Match Group, the parent company behind Tinder and other dating apps, are up more than 40 percent since the start of 2018, Sheridan said. The stock is now trading at a 24x 2019E GAAP EBITDA and a 35x multiple on 2019E FCF-SBC, reflecting a "more balanced" risk-reward profile, the analyst said.

Match's longer-term outlook remains favorable, and its portfolio of dating platforms should be able to capitalize on the global growth of online dating, the analyst said. Tinder will prove to be an outsized contributor to forward subscribers, revenue and EBITDA growth, Sheridan said.