IAC Has More Room To Move Higher

Despite the 9 percent appreciation in IAC/InterActiveCorp IAC shares over the past four weeks, as compared to the 2 percent rise in the S&P 500, the stock continues to trade at a meaningful discount to its net asset value.

Axiom’s Victor Anthony maintains a Buy rating on the company, while raising the price target from $74 to $80.

Multiple Catalysts

Anthony believes InterActiveCorp’s discounted valuation is due to “model complexity, a lack of understanding of the key assets, and concerns about the longer-term sustainability of the Publishing and Applications businesses.”

Related Link: Wells Fargo Upgrades IAC/InterActive To Outperform

The analyst sees multiple catalysts for the stock that would drive a narrowing of the discount, such as continued execution at HomeAdvisor and a potential spinoff of the business, continued momentum at Match Group Inc MTCH and a potential spinoff of Match’s shares, growth momentum at Vimeo and share buybacks.

Momentum To Continue

For the HomeAdvisor business, Anthony expects “continued strong domestic growth driven by growth in service professionals and service requests coupled with margin expansion.”

The analyst expects revenue and EBITDA for this business to grow at 22 percent and 60 percent, respectively, from 2015 to 2018.

In addition, while Vimeo saw 15 percent year on year growth in paid subscribers to 720,000 in Q3:16, Anthony believes the VHX acquisition would accelerate the SVOD opportunity and the momentum would be sustained.

Full ratings data available on Benzinga Pro.