Bankrate's New Management Addresses Legal, Regulatory Issues

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Loop Capital Markets sees opportunity for Bankrate Inc RATE to increase conversions and add value for customers with dynamic pricing, an improved mobile user experience and personalization.

However, the brokerage initiated the coverage of RATE with a Neutral rating and $9 price target as it believes the stock is fairly valued at 8.3x EV/EBITDA and 14.9x P/Eon its 2017 estimates, with growth expected to be in the mid-to low teens percentage.

Bankrate, which is transitioning from a reliance on search engine marketing (SEO) for traffic, has cleaned up its accounting and legal issues and has made two major transactions with the sale of its Insurance business. The company also bought content marketing platform Next Advisor.

Further, Bankrate has restated its financials for 2012 and earlier, reached a settlement with the SEC and has put in place a new CEO, CFO and Finance team.

"We believe the new management team has properly addressed the issues and has the opportunity with credible guidance and execution over the next several quarters to regain investor confidence," analyst Blake Harper wrote in a note.

Harper bets on the Senior Care business terming it as a large market opportunity with cross sell potential. The analyst said the Senior business should achieve positive EBITDA this year after posting $0.4 million in EBITDA in 2015.

"We believe the company's ability to potentially grow faster and improve margins should help the stock trade to our price target ($9)," Harper added.

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