Needham Sees 5 Reasons to be Optimistic on Magnite's (MGNI) Growth Going Forward
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Needham & Company analyst Laura Martin reiterated a Buy rating and $70.00 price target on Magnite (NASDAQ: MGNI) after the company reported unimpressive 1Q21 CTV growth of 32% y/y (vs SpotX at 70% and Roku at 100% y/y). However, that changed on April 30th when the company acquired SpotX, which doubles MGNI's CTV revenue and at 2x-4x higher EBITDA margins.
The analyst offered 5 reasons to be optimistic about growth going forward:
1) 1Q21 revenues were up 34% y/y and adjusted EBITDA was up 235% y/y.
2) Together, MGNI and SpotX represent the largest digital video Sell-Side Platform (SSP) in a winner take all industry
3) Advertising revs are closely correlated to GDP growth. After shrinking by 3.5% in 2020, US GDP is projected to grow by 6.5% in 2021.
4) The growing the total addressable market (TAM) is a more valuable upside driver than take-rate.
5) MGNI's total revs are estimated to be 30% exposed to Cookies in 1Q21. Since CTV revenue is growing much faster than MGNI's total revs, risk from Cookies deprecation is falling since CTV has no Cookies.
Shares of Magnite closed at $28.56 yesterday.
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