H.C. Wainwright Starts Local.com (LOCM) at Buy
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H.C. Wainwright initiated coverage on Local.com (NASDAQ: LOCM) with a Buy rating and a price target of $4.00.
Analyst Amit Dayal said, "LOCM is in the early stages of implementing a new business strategy that over time should make the business less dependent on its traditional partnership-driven, search monetization model. Some of the big changes that have taken place over the last few quarters include a new CEO and new strategic initiatives that should boost organic traffic and revenues and allow for stronger margins. Under the new CEO there has been a renewed emphasis on R&D, which we believe should allow the company to introduce new products and services that leverage the ‘local search’ and ‘local commerce’ theme. LOCM stock is currently trading around $1.70 levels giving the company a market cap of ~$38 MM and EV of ~ $45MM. This translates to an EV/Rev multiple of ~0.4x to our $118M revenue expectations for FY2015 (15% y/y growth). This compares to peer average EV/Rev multiple of ~4.3x. Our price target of $4.00 translates to an EV/Rev multiple of ~0.8x (in relation to our 2015 revenue expectations for LOCM), which we believe is conservative relative to its peers and accommodates for the early stages of various new strategic initiatives underway at the company."
Shares of Local.com closed at $1.78 yesterday.
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