UPDATE: MKM Partners Initiates Coverage on Angie's List on Market Leader Position
In a report published Thursday, MKM Partners analyst Rob Sanderson initiated coverage on Angie's List (NASDAQ: ANGI) with a Buy rating and $34.00 price target.
Sanderson noted the rise in membership, an increase in the monetization of the user base, the cost base to retain members is decreasing, Angie is ahead of competitors in their large network effect, and “service providers are finding large value by advertising on ANGI and more than 100% of contract revenue is renewing.”
The MKM analyst estimated membership growth to 4.8M in 2017 and 6.7M in 2020. Despite the controversy over membership price cuts, Sanderson commented on the positive impact this may have on driving business.
"Local commerce is the fastest growing segment of online advertising today. ANGI has a leading position in this large and untapped opportunity. There are hundreds of billions in annual spending on local consumer services and a sizable advertising opportunity. Digital marketing has had very little influence to date, but this is quickly changing," according to Sanderson.
On Monday, Angie terminated the CTO and shares fell more than 15 percent over two trading sessions. Rumors suggested this termination was related to concerns the eCommerce business was not meeting expectations, although MKM Partners disagreed as transaction increased 25% last quarter.
Affecting shares on Thursday, the WSJ issued a note late last night suggesting the company is cutting prices for new users. Investors are clearly not liking this news, bidding the stock down more than 14 percent.
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