Needham & Company Cuts Price Target on Bankrate (RATE); Says Headwinds may Persist into 1Q16
Needham & Company reiterated a Buy rating on Bankrate (NYSE: RATE), and cut the price target to $15.00 (from $20.00), following the company's 4Q earnings report. Needham is expecting RATE to open significantly lower due to disappointing results. revenue of $93.4mm, and Adjusted EBITDA of $28.5mm, both came in below estimates. Competitive issues and downward pricing pressure in its two key business lines will persist into 1Q16, based on management's updated guidance.
Analyst Laura Martin commented, "We expect RATE to open significantly lower today owing to disappointing 4Q15 results at revenue of $93.4mm (up 2% y/y and 1% below our estimates), and Adjusted EBITDA of $28.5mm (down 8% y/y and 14% below our estimates). Competitive issues and downward pricing pressure in its two key business lines will persist into 1Q16, based on updated guidance. We lower our 1Q16 estimates to revenue of $84mm and Adjusted EBITDA to $20mm. In 4Q15, we estimate that Google’s compare product lowered credit card segment’s EBITDA by $5mm in 4Q15 (and in 1Q16E), but GOOG has announced it is closing this product by 3/31/16. Banking saw deposit revenue declines, so RATE is introducing dynamic pricing which should stabilize deposit revenue. We retain our BUY but lower our target price to $15 based on the higher risk outlook for FY16."
For an analyst ratings summary and ratings history on Bankrate click here. For more ratings news on Bankrate click here.
Shares of Bankrate closed at $12.68 yesterday.