Susquehanna Downgrades Criteo S.A. (CRTO) to Neutral
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Susquehanna downgraded Criteo S.A. (NASDAQ: CRTO) from Positive to Neutral with a price target of $37.00 (from $48.00), saying header bidding creates challenging risk/reward.
Analyst Shyam Patil highlighted:
- Header bidding creates risk. We believe the uptake of header bidding (HB) creates risk for CRTO, especially since HB adoption is occurring much faster and more broadly (geographically and mobile) than many have been assuming, including CRTO, which has said that it believes HB is mainly a US desktop issue.
- Not just a U.S. phenomenon…EU and APAC are starting to adopt. According to our checks, 2015 was the year of HB uptake in the U.S. for mid-market and Tier 1 publishers, and 2016 looks to be the year of EU uptake. Our checks have also indicated increased traction in APAC, specifically Japan, where many of the top publishers are in the process of evaluating HB. Indeed, our proprietary website analysis shows that HB is rapidly gaining share in Europe. According to our analysis of the top 50 news and media sites in the US, UK, Germany, France, and Japan, HB penetration is already close to 60% in the UK and Germany, putting it on par with the US…and France is now up to 32% and Japan is at 14%. Note that these are all important markets for CRTO as they in aggregate represented 72% of CRTO’s gross revenue in 2015: specifically, the US was 32% of revenue, UK 8%, Germany 8%, France 9% and Japan 14%. We believe that HB uptake may be occurring at a much faster pace in Europe and APAC than CRTO has assumed based on recent commentary where management continues to maintain that it believes HB is primarily a US phenomenon.
Shares of Criteo S.A. closed at $38.60 yesterday.
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Related EntitiesSusquehanna International Group of Companies
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