DoubleVerify And META's Anticipated Verification Launch: A $90M Opportunity According To Analyst

JMP Securities analyst Andrew Boone raised the price target on DoubleVerify Holdings Inc DV to $45 from $35, reiterating Market Outperform.

Boone sees no sign of a slowdown in brand safety demand, with higher international traction with clients and contributions from Authentic Attention.

The analyst believes Meta Platforms Inc META and DoubleVerify are scheduled to launch third-party verification of brand safety for the Facebook feed by the end of 2023. 

Related: DoubleVerify's Social Media Revenues To Gain From META, TikTok Line Of Products, Analyst Boosts Price Target

Boone sees this as around a $90 million opportunity but has incorporated only revenue of $40 million into the 2024 projections due to a lack of clarity around the rollout of third-party brand safety. 

The analyst expects the contribution margin for Meta brand safety revenue to be at least 80% as expenses are already factored in their model.

Overall, the analyst believes DV has a highly defensible business with multiple growth levers, such as ABS, social, and attention, along with over EBITDA margins of 30%+ that are expected to expand with ramping up of Meta brand safety.

Consequently, Boone is incorporating Meta brand safety revenue into DV 2024 estimate and raised 2024 EBITDA by around 12% to $247 million (33.8% margin) from around $220 million (31.8% margin) earlier, with ~70% flowing through from incremental revenue.

Also Read: DoubleVerify Has Strong Growth Prospect As Advertisers Pursue Ad Spend Optimization: Analyst

Price Action: DV shares are trading higher by 2.90% at $40.04 on the last check Monday.