Macquarie Upgrades ironSource To Outperform On Q3 Beat, Q4 Outlook; Considers Selloff As Misplaced

Macquarie analyst Tim Nollen upgraded ironSource Ltd IS to Outperform from Neutral with an unchanged price target of $14, implying 61.66% upside. 

• ironSource reported "good results" and raised guidance, so the roughly 40% stock selloff since November 10 looks "misplaced," Nollen tells investors. 
• ironSource's Q3 revenue of $140 million, up 60% year-on-year, beat the consensus of $129.2 million. EPS of $0.02 was in-line with the consensus.
• ironSource sees Q4 revenue of $140 million - $145 million, representing 32% Y/Y growth at the midpoint.
• ironSource sees FY22 revenue of $535 million - $540 million, representing 62% Y/Y growth at the midpoint.
• "Beyond strong organic growth, this approach has also driven our M&A strategy, with the announcement of two strategic acquisitions designed to deepen and expand our platform offering to increase our stickiness with customers," CEO Tomer Bar Zeev said.
• App developers use ironSource's platform to turn their apps into successful, scalable businesses. The ironSource platform also empowers telecom operators to create richer device experiences for their customers.
• While noting that advertising technology stocks as a group have sold off sharply following the Q3 reporting season, Nollen remains positive in this sector due to solid fundamentals that he doesn't think will be much affected by rates or COVID-19 variants.
• Price Action: IS shares traded higher by 2.54% at $8.88 in the premarket session on the last check Wednesday.