UPDATE: Jefferies Deep Dive on Vimeo Implies $7.5B Valuation, IAC/InterActiveCorp (IAC) PT Raised to $245

January 25, 2021 7:34 AM EST
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Price: $248.39 -1.06%

Rating Summary:
    24 Buy, 6 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 17 | Down: 13 | New: 41
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(Updated - January 25, 2021 8:16 AM EST)

Jefferies analyst Brent Thill raised the price target on IAC/InterActiveCorp (NASDAQ: IAC) to $245.00 (from $225.00) offering a deep dive ahead of the planned Vimeo 2Q spin-off. Vimeo is a SaaS video platform for enterprises and SMBs, levered to key trends across both software and internet. Considering IAC's track record, the significant TAM that appears to be < 1% penetrated, and strong fundamentals, the company could be a compelling standalone story and could deserve a $7.5B valuation.

The key takeaways, highlighted by the analyst include:

1) We derive a $180B TAM with <1% subscriber penetration in both enterprise and self-serve

2) Key Metrics include 1.5M subscribers of which > 99% are self-serve and < 1% are enterprise, ~$20K enterprise ARPU vs ~$200 self-serve ARPU, and net retention > 100%

3) 33%/25% top line growth estimated for CY21/CY22

4) 16x CY22E EV/Rev multiple = $7.5B valuation

The analyst maintained a Buy rating, stating "Our $7.5B valuation implies 16x our CY22 revenue estimate. For comps, we examine software and internet companies within video hosting, storage, video creation, collaboration, website building, and stock content. We zoom in on three growth software companies: ADBE, SMAR, and ASAN. This subset trades at an average 14.5x EV/CY22E Rev (with 24% growth), and our 16.0x multiple reflects our forecasted CY22 Rev of 25% that is slightly ahead of comps.

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