Digital Turbine (APPS) PT Raised to $90 at Craig-Hallum as AdColony Brings in App Advertising
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Craig-Hallum analyst Mike Malouf raised the price target on Digital Turbine (NASDAQ: APPS) to $90.00 (from $80.00) after the company announced the acquisition of AdColony for $400M. $100M in cash at closing, $100M 6 months after closing and the remaining $200M 12 months after closing based on revenue earnout incentives. The deal is expected to close by end of March or beginning of April. AdColony did $211M in revenue and $9.8M in EBITDA in 2020 and was just hitting profitability.
The analyst reiterated a Buy rating, stating "Based on our 15% revenue growth assumption and ~12% EBITDA margins, we estimate Ad Colony could add ~$240M to revenues and ~$30M in EBITDA for APPS in 2021. We think the AdColony acquisition was a great buy by APPS given the cheap buyout price of only ~2x revenues and potential for significant synergies/cross selling between the companies." He went on to state "AdColony is their first move to vertically integrate and allow them to participate in advertising in apps. We think there is a significant opportunity with APPS’ Single Tap business as they know which customers have this and can layer in AdColony’s solutions."
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