Some comments from the analysts, then my two cents, followed by some “I told you so’s”
Naturally, this morning, analysts are getting excited about a few online advertising companies they cover after Doubleclick got bought out for $3.1B by Google. aQuantive is one of these companies, and a stock I have owned for quite some time, having bought and sold and bought again:
Banc of America Securities analyst Jonathan A. Jacoby said the deal means aQuantive’s digital marketing business, Atlas, is worth more than people thought. Jacoby said he’d valued Atlas at 14 to 16 times the segment’s earnings before interest, taxes, depreciation and amortization.
With Google paying 25 to 31 times earnings before interest, depreciation and amortization (ebitda) for DoubleClick, Jacoby said Atlas could be worth anywhere from $1.3 billion to $1.6 billion. That would add $5 to $8 to aQuantive’s share price, he said.
Piper Jaffray analyst Aaron Kessler said it’s a good sign the price tag was higher than the $2 billion initially reported in the Wall Street Journal last month. It indicates there was probably a bidding war, he said. AQuantive’s Atlas unit, now the biggest player in the digital marketing game still on the market, could be of interest to a big media or technology company, he said.
Based in Seattle, aQuantive makes software allowing marketers to target advertising campaigns on Web sites. The company reported $442.2 million in sales last year.
Kessler hiked his price target from $36 to $38, which is a third higher than the closing trade of $28.52 on the Nasdaq Stock Market on Friday. Analysts from UBS, CIBC, JPMorgan and Merriman Curhan Ford upgraded aQuantive’s stock on Monday.
Shares of aQuantive climbed $3.38, or 11.9 percent, to $31.90 in premarket trading Monday. AQuantive’s stock hasn’t traded that high since before the tech bubble burst. The stock’s current 52-week high, reached last week, is $29.37.
I’ve always said, nothing against analysts, but they’re reactive, after-something-happens prognosticators. If you want to get a sense of what’s what, ask folks who work in the industry, here’s one example of that.
But here’s something else that baffles me: aQuantive still operates in many of the segments that Doubleclick got out of.
Doubleclick is a software entity now, aQuantive is a technology and media company, and frankly, it is far better positioned to benefit from the rise of display advertising than Doubleclick ever was since it got out of the media business when it sold that unit to MaxOnline.
In other words, saying that Doubleclick is in the media business is akin to saying that Microsoft is really in with ad agencies because ad agencies use Powerpoint in their client pitches. That’s nonsense… but few people are actually calling it like it is.
In fact, a few analysts are rushing to put their seal of approval on the Goog/DCLK deal without even knowing who does what.
Forrester analyst Charlene Li described the deal as a must-have for Google. “It’s a lot of money, but who cares? This is one of the things they had to buy,” she says. “They were not making any headway” on display ads.
Wow. I guess the bottom line, is that whether you are Google or a small investor: buyer beware!
Related posts to AQNT:
:: “AQNT: I told you so. Maybe You Should Listen to Me?” - Feb. 2007
:: “AQNT: I am telling you, Listen To Me! - Nov. 2006
Related posts to this deal:
:: Why GOOG’s DCLK Makes Little Sense (To Me)
:: Two Variables to Look for in GOOG/DCLK Deal
:: Likely Scenarios in Aftermath of Deal?
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