SunTrust Initiates Coverage On comScore

SunTrust initiated coverage on comScore, Inc. SCOR Tuesday with a Buy rating and $53 price target.

Analysts led by Robert S. Peck noted four tenets for their rating.

1) “validated Campaign Essentials (vCE) could be a significant multi-year growth driver; the gross profit lift from the Google partnership in particular is likely underappreciated.

2) “The nascent Total Video solution should layer into growth starting 2015 (+$11M to revs) and increasing in 2016 (+$13M to revs).”

3) “The flagship Media Metrix (MMX) franchise (40-50 percent of total revenue) should grow in the teens at least through 2016 with high visibility driven by upsell of cross-platform, mobile, and video modules (at $25K-$50K per annum each) into the installed legacy PC MMX base ($75K annual ARPU).”

4) “comScore could be a acquisition target as a neutral, independent, MRC accredited leader in the necessary, evolving, and growing (double-digit) market for digital and cross-platform advertising audience measurement, analytics, and verification.”

The price target was based on 18x 2016 EV/EBITDA and 24x P/E (vs. 2-year ’14-’16 EBITDA growth of ~20%) and 10-year DCF analysis (15x terminal FCF).

Peck concluded that the “company is on the front-end of a multiyear multi-product cycle that should (at least through 2016) drive strong top-line growth (~16 percent) and margin expansion (EBITDA growth ~20 percent) with bottom-line further supported by buybacks.”

Related Link:  Brean Capital's take on comScore.

comScore, Inc. closed at $43.17 Monday, down 1.82 percent.