Axiom: AOL Has 18% Upside, Will Grow In 2016

In a report published Friday, analyst Victor Anthony of Axiom initiated coverage of

with a Buy rating and a price target of $47. AOL's shares have been suffering this year due to the company's guidance of zero EBITDA growth in 2015, the increasing investments in the AOL and Brands Platforms, as well as the sales force restructuring. All these factors are expected to lead to revenue declines in 2H15. According to Axiom, "The set-up post this investment year calls for a return of that investment in the form of faster revenue growth and higher incremental margins at both segments, leading to what we believe should be above consensus 2016 EBITDA." For now, with the company's shares trading at a significant discount to its peers in the online media segment, the stock offers "intrinsic asset value." As the year progresses, investors are likely to become more comfortable with the expectations for 2016, which could take the share price up. Analyst Victor Anthony expects "further expense reductions post this investment year." We believe an acquisition/merger scenario could again emerge as part of the bull case," Anthony added.