Millennial Media (MM) Slashed on Q4/Outlook; Analysts Defend and Traders Eye

February 20, 2013 11:02 AM EST
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Price: $1.75 --0%

Rating Summary:
    5 Buy, 8 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 22 | Down: 32 | New: 34
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Traders have their eyes on today's earnings blow-up Millennial Media (NYSE: MM) for a possible bounce play. Shares are down 35 percent mid-day following disappointing results and outlook after the close.

Millennial Media reported Q4 EPS of $0.03, $0.02 better than the analyst estimate of $0.01. Revenue for the quarter came in at $58 million versus the consensus estimate of $62.89 million. The company sees Q1 2013 revenue of $48-50 million, versus the consensus of $56.41 million, and FY2013 revenue of $270-280 million, versus the consensus of $286.4 million.

Despite the disappointment, analysts at Oppenheimer are sticking with their Outperform rating and $19 price target saying it remains the best mobile play.

"While MM bears will suggest competition is cutting into revenue growth, we believe the company is leveraging its leading position to diversify its product offerings," analyst Jason Helfstein states. "Although it reported mixed 4Q results, we are increasing our '13 and '14 EBITDA estimates on higher margins and maintaining our $19 price target. 4Q revenue was below guidance on pull-back in retail advertising; however, EBITDA exceeded expectations on a shift to higher margin/quality ads. 2013 revenue guidance below Street on decision to forgo low-quality, download ads. Launch of mobile RTB platform in mid-2013 could provide upside to guidance. We view MM shares as the best way to play mobile transition and would be buyers on weakness."

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