Analyst: ANGI Homeservices Remains Headwind For IAC/Interactive, But Overall Valuation Improving

IAC/InterActive Corp IAC has a path to a $2-3-billion valuation, according to Guggenheim. 

The Analyst 

Guggenheim analyst Jake Fuller maintains a Neutral rating on IAC/Interactive. 

The Thesis

Although ANGI Homeservices Inc ANGI investments are headwinds, the IAC portfolio as a whole continues to perform well, and visibility on a sum-of-the-parts argument is improving, Fuller said in a Monday note. 

“While ANGI came up short in the quarter, Match Group Inc MTCH turned in solid results and IAC’s portfolio of wholly owned businesses exceeded expectations,” the analyst said. 

Guggenheim said that while its 2019 EBITDA estimate is down after factoring in ANGI, the sell-side firm continues to see healthy growth at Vimeo and strong profit contributions from Dotdash and applications.

“With greater financial disclosure around Vimeo and Dotdash, as well as healthy underlying trends across the portfolio of wholly owned assets, comfort in the SOTP case for IAC is up.”

While Guggenheim historically assigned a value of around $900 million for IAC’s wholly-owned assets, a path to a $2-3-billion valuation is taking shape due to favorable trends and increased disclosure, Fuller said. 

The analyst isn't quite ready to take a bullish stance. 

“At or below the midpoint of the $2-3 billion range would not leave us with enough upside potential to justify a Buy rating," he said. "The high end would be enough, but we need to see more to get comfort in the sustainability of topline growth (Vimeo, Dotdash) and margin levels (Dotdash, Applications)."

Price Action

IAC/Interactive shares were down 0.27 percent at $220.95 at the time of publication Tuesday. 

Related Links:

Tinder Lights A Fire Under Match Group, Now Accounts For Half Of Paid Subscribers

Tinder Transformed Online Dating, But High Expectations Are Priced In, Says Wells Fargo

Photo by Alec Perkins/Wikimedia.