Chardan Upgrades Perion Networks To Buy, Cites Stabilizing Turnaround Story

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  • Perion Network Ltd PERI shares have lost 45 percent year-to-date, declining from a high of $4.52 on January 2 and hovering around the $2 mark over the past one month.
  • Chardan Capital Markets’ Marc Estigarribia upgraded the rating on the company to Buy, while establishing a price target of $4.
  • The revenue growth turnaround reflected by the company’s 3Q results could lend stability to profits in the next quarter, Estigarribia said.

Perion Network reported its 3Q15 revenues at $52.6 million, representing 8.4 percent sequential growth. With this, the company reported a revenue growth turnaround for the first time in six quarters. The growth was driven by its software monetization platform efforts.

Analyst Marc Estigarribia said that although Perion Network’s 3Q figures reflect a y/y decline, this was mainly due to the company’s decision to exit the download industry and lower its customer acquisition costs. He added that the transition to a lower risk revenue share business model should be completed by next quarter.

Saying that it would take one more quarter to complete its turnaround, Perion Network has guided to revenue of $52-$54 million and non-GAAP net income of $4-$5 million for 4Q. Since profits lag revenue, the company has indicated that it expects its EBITDA to bottom out in 4Q, and has projected $6-$7 million.

Estigarribia wrote, “The Company executed on its revenue turnaround for its software monetization efforts and now looking to stabilize in cash flow.” Perion Network’s current cash position is $1.81 per share. “This stock is a value play,” the analyst added.

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