Why BMO Is Positive On Nielsen

Nielsen Holdings PLC NLSN could see a bump from improving investor sentiment amid the call to regulate the "Big Data" use, an analyst at BMO Capital Markets said.

The Analyst

Daniel Salmon upgraded Nielsen from Market Perform to Outperform, with a $38 price target.

The Thesis

Sentiment toward Nielsen stock is shifting, as "big data/platform" regulation increases and 3P measurement looks more sustainable, Salmon said in a Monday note. The analyst sees tightening regulation on open internet platforms as positive for a third-party measurement company.

"We believe advertisers will further increase focus on verifying data from large internet platforms, which we believe could increase the demand for products from companies like Nielsen," Salmon said.

These trends bode well for both Digital Ad Ratings and Digital Content Ratings, products that can be used to measure/authenticate digital ad campaigns and audiences.

"Additionally, we believe Nielsen Catalina Solutions (NCS) and Visual IQ could benefit from recent trends in the industry," the analyst said.

Salmon said the company has opportunity to see marginally improved revenue trends in Watch, as clients redouble efforts to verify measure and authenticate new media channels.

The trough valuation at which shares are trading renders it attractive, the analyst added.

The firm sees the upgrade more as an opportunistic call on Nielsen, rather than a material change in how it views the company's mid- and long-term role in the ecosystem.

Price Action

Shares of Nielsen are down about 9 percent in the year-to-date period. At time of writing, shares were up 3.6 percent on the day to $33.52.

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