TubeMogul Falls 6% Amid Citi Downgrade

Citi downgraded TubeMogul Inc TUBE Monday from Buy to Neutral and raised its price target from $13 to $19.

Analysts led by Mark May noted that TubeMogul reported strong 3Q results, as Spend, Revenue, Gross Profit, EBITDA, and margins were all well above our estimates and guidance. The company also gave 4Q guidance that was above our estimates, and announced a number of client wins for its Platform Direct business.”

May concluded that “while we continue to view TubeMogul as a best-of-breed digital advertising solution, shares have re-rated meaningfully higher since the IPO and two subsequent earnings reports, and now more fully reflect our positive fundamental view and the potential further upside to estimates.”

May commented that “operating leverage also was above our estimates, as EBITDA was roughly breakeven at $0.5mn. However, we expect management will look to reinvest IPO proceeds more heavily in 4Q and beyond, and thus do not expect this degree of operating leverage to persist in the near term.”

The analyst report concluded that with increased CY15 forecasts “and we now look for spend, revenue, gross profit, and EBITDA of $380mn, $154mn, $114mn in gross profit, and $(2)mn.”

TubeMogul Inc recently traded at $15.84, down 6.49 percent.