IAC's Vimeo Spin-Off Could Be Worth $10B, Analyst Says

IAC/Interactivecorp IAC said on Tuesday it will spin-off its Vimeo video platform business that could be worth $10 billion in the public markets, according to BofA Securities.

The Analyst: Ryan Gee maintains a Buy rating on IAC's stock with a price target lifted from $154 to $214.

The Thesis: IAC shareholders will need to approve the proposed spin-off in the first quarter of 2021 and the spin could be completed in the second quarter. Gee said the business was valued at $2.75 billion in a recent private capital raise, but it could fetch a higher valuation as a public entity.

Related Link: Benzinga's Top Upgrades, Downgrades For December 23, 2020

Vimeo is one of the very few pure-play SaaS video hosting, sharing, and services platforms and is considered to be the most valuable asset in IAC's portfolio. Applying a similar multiple as other high-growth SaaS comps and Mature-Growth Design software peers at 0.8 to 0.9 times EV/Sales or 17 times 2022 estimated sales yields a valuation of around $10 billion.

"The scarcity of public comps offering hosting services should support the multiple, but we also acknowledge that, unlike MTCH (which it spun earlier this year), Vimeo competitive advantages and market share are less compelling," the analyst wrote in a note.

Price Action: Shares of IAC were trading lower by 1.7% to $180.53 at publication time.