Perion Network Ltd (NASDAQ:PERI) stock is trading higher Wednesday as Oppenheimer analyst Jason Helfstein reiterated an Outperform rating with a price target of $45. The analyst reiterated the stock as a top small-cap pick.
The re-rating reflected the acquisition of digital out-of-home (DOOH) platform Hivestack for $125 million cash (including a $25 million 3-year earn-out).
The transaction equated to 1.3x/6.7x FY25E revenue/EBITDA. The target company adds customized video campaign solutions for billboards/digital surfaces and taps both sides of the marketplace (Hivestack operates DSP & SSP).
The analyst writes that DOOH is ~25% of ~$80 billion billboard/out-of-home advertising market, suggesting a continued tailwind from the shift to digital.
Furthermore, Hivestack’s exposure to EMEA/APAC (18%/19%) allows for attractive geographic cross-sell vs. PERI’s U.S. focus.
Targeting FY24E Hivestack revenue and EBITDA of $63 million and $4 million, increasing to $100 million and $19 million on cross-sell, up-sell, and operating leverage, representing ~50% annual revenue vs. Hivestack’s FY23 growth of ~25%.
The analyst’s price target assumes 8x FY25E EBITDA vs. peers at 6x or 17x FY24E EPS.
For Perion, the analyst projects Q4 revenue and EPS of $231.12 million and $0.76.
Price Action: PERI shares traded higher by 5.88% at $31.49 on the last check Wednesday.
