B.Riley Resumes Magnite (MGNI) at Buy

B.Riley analyst Daniel Day resumes coverage on Magnite (NASDAQ: MGNI) with a Buy rating and a price target of $14.50.

The analyst commented: "We are resuming coverage of Magnite, Inc. (MGNI) with a Buy rating and a $14.50 PT, which is based on an FY24E EV/adjusted EBITDA multiple of 12x. MGNI is the largest independent supply-side platform (SSP), providing software tools for publishers to automate the sale of digital advertising on the open Web. The company breaks out revenue into two segments: connected TV (CTV) and display, video, & other (DV+). Through a transformative merger, a rebranding, a series of CTV-focused acquisitions, and the completion of a multiyear integration process that merged streaming assets onto a single platform, MGNI has positioned itself as a leading independent ad tech partner for CTV publishers. Although the unfavorable mix shift toward premium publishers (lower take rate business) presented headwinds to the CTV segment in 2H23 (down 4% Y/Y), MGNI appears poised to regain momentum in FY24 as management has guided to low-double-digit CTV growth supported by strengthening ad spending trends—2024 gross ad spend is expected to accelerate from high-teens Y/Y growth in 2023—the increasing shift of live sports into streaming environments, a stabilizing mix of higher take rate business, and growing adoption of the company’s ClearLine product. Our Buy rating is underpinned by strengthening ex-traffic acquisition cost (TAC) revenue growth (guiding to 10% Y/Y in FY24 versus +7% Y/Y in FY23), renewed adjusted EBITDA margin expansion (guiding to ~100 bps Y/Y expansion in FY24), and a meaningfully improved capital structure. With MGNI shares trading at an FY24E EV/adjusted EBITDA multiple of ~7.2x, we believe the risk/reward profile is attractive ahead of the expected acceleration in CTV growth in 2H24."

For an analyst ratings summary and ratings history on Magnite click here. For more ratings news on Magnite click here.

Shares of Magnite closed at $8.64 yesterday.

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