Oppenheimer Downgrades Rocket Fuel, Cites 'Lack Of Catalysts'

In a report published Friday, Oppenheimer analyst Jason Helfstein downgraded shares of Rocket Fuel Inc. FUEL to Perform from Outperform while removing a prior $22 price target due to a lack of near-term catalysts. Helfstein noted the company's first quarter net revenue guidance implies high-teens organic growth, representing a deceleration from the 34 percent growth the company showed in the fourth quarter. The analyst added that the company's first quarter EBITDA guidance is $15 million below the Street's expectations. "We see no catalysts in the next six month, as management needs to prove it can generate enterprise sales, and scale sales and marketing expenses, currently at 58 percent of net revenue, to drive EBITDA profitability," Helfstein wrote. The analyst added that shares do not warrant a multiple similar to its ad-tech peers at 3-4x sales but suggests a 1.5-3.0x 2015E net revenue may be appropriate which gives a range of $9 to $18.