Goldman Sachs Sees Consolidation in Ad Tech Space (CRTO)

Goldman Sachs reiterated a Buy rating on Criteo S.A. with a (NASDAQ: CRTO) price target of $42. Analyst Debra Schwartz sees consolidation within the space, and she views Criteo is the most likely target. Last week Les Echos reported that Publicis has restarted talks to buy Criteo. Reuters later reported a deal was unlikely.

"While M&A in ad tech over the last five years has largely been driven by sub $500mn private deals, we see several factors including high cash balances, increasing disparity in valuations, an evolving competitive landscape, and growing benefits of scale that could accelerate the pace and scale of activity," said Schwartz.

"We reiterate our view that Criteo could be a valuable asset to several in the digital ecosystem including agencies, publishers, and ad tech pure plays," said added. "While bolt-on digital M&A remains the near term agency focus, we see scope for transformational deals given 1) increased competition from both first party publishers and agencies investing to grow programmatic wallet share with FUEL’s (Nasdaq: FUEL) cut to H2 guidance a key example; 2) low market concentration for agencies and lower anti trust concerns following regulatory approval of the Publicis-Omnicom proposal and; 3) strong FCF generation and falling leverage ratios. While we take no view on the likelihood of a deal, Publicis' conservative balance sheet leaves capacity for a $2-3bn acquisition."

For an analyst ratings summary and ratings history on Criteo S.A. click here. For more ratings news on Criteo S.A. click here.

Shares of Criteo S.A. closed at $37.55 yesterday.

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