Northland Securities Starts Angie's List (ANGI) at Outperform; Proven Long-Term Characteristics

November 27, 2012 6:45 AM EST Send to a Friend
Get Alerts ANGI Hot Sheet
Price: $6.64 -0.9%

Rating Summary:
    3 Buy, 16 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 1 | Down: 1 | New: 6
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Northland Securities initiates coverage on Angie's List (NASDAQ: ANGI) with a Outperform. PT $15.00.

The firm comments, "While the recent hyper-growth in member and service provider (SP) additions have elevated selling and marketing costs (as a % of sales), we believe the proven long-term characteristics of ANGI's model far outweigh any near-term risks and investors should focus on: 1) estimated SP renewal contribution margins of ~80%, 2) 70%+ renewal rates for both SPs and members, 3) operating margins in older cohorts estimated at 23%, 4) the high degree of revenue visibility (we estimate ~65%) and 5) <1% advertising penetration rates of enormous TAM. While we believe a discount is warranted for ANGI relative to its peers, given it has not achieved profitability, we believe its top line growth rate, which represents better than or equal growth to its peers, however, does not warrant its current 44% implied discount to its 4.5x peer group multiple of EV/’13E sales."

For an analyst ratings summary and ratings history on Angie's List click here. For more ratings news on Angie's List click here.

Shares of Angie's List closed at $10.78 yesterday.


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