Craig-Hallum Expects Magnite (MGNI) to Bounce
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Craig-Hallum analyst Jason Kreyer reiterated a Buy rating and $25.00 price target on Magnite (NASDAQ: MGNI) noting the company's impressive roster of Connected TV partnerships, ranging from brands/agencies to manufacturers and publishers creates a moat that should prevent competitors from dislodging the company's lead.
The analyst stated "While we recognize CTV spend has seen some hiccups in recent months given supply chain impact on some verticals, we believe 2H22 is poised for supply chain relief, as well as upside from political spend not currently reflected in numbers. With a valuation of just 12x FY23 EV/EBITDA, we believe shares of MGNI reflect an attractive opportunity given the high barriers to entry on CTV, potential for upside to 2H22 numbers, and de-leveraging funded by a 6% FCF yield." "Valuations for Connected TV-related businesses have plummeted in the past six months, with all participants down >50%. The pullback in shares across CTV has been driven almost completely by valuation multiples, as FY22 estimate revisions have been relatively minute. For perspective, MGNI estimates for FY22 have been revised down by just 1% in the past six months, and the average revision across the peer group above was a -2% (excluding unique revisions). While headwinds from supply chain issues remain intact, we believe these should subside as we head into 2H22. Further, we believe estimates for MGNI do not fully reflect upside scenarios from political advertising, which could yield an MSD upside revision."
Shares of Magnite closed at $13.39 yesterday.
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