Analyst Likes YuMe's Secular Story, But Sees 'Visibility, Slow Programmatic' Weighing

• YuMe Inc YUME shares have declined 43.06 percent year-to-date, touching a low of $2.45 on September 29.
• Murali Sankar of Boenning & Scattergood has initiated coverage of the company with a Neutral rating.
• Sankar would prefer to remain on the sidelines till there are signs of traction in the company’s programmatic solution and significant topline acceleration.

Analyst Murali Sankar said, “YUME is a beneficiary of the shift to online video advertising and has a data-driven advantage in helping advertisers overcome audience fragmentation issues.”

Sankar also emphasized that the company has struggled to launch its programmatic solution, while having “lost visibility” into revenue growth in the near term.

However, Sankar believes that there are various factors that are driving the secular growth in the online video advertising market, such as increased consumption of such content by the consumer, shifting ad budgets to this space and “increasing and sophisticated” monetization of video.

According to the Boenning & Scattergood report, the global online video ad market is expected to grow from $16.1 billion in 2015 to $32.1 billion in 2019, and that YuMe has a competitive advantage in the “sophisticated use of data” delivered to the target audience.

This drives positive outcomes, such as “helping marketers overcome fragmentation”, while “delivering a valuable audience by aggregating many impressions across publishers and device; and… finding “look-alike” audiences by examining common traits of audience members or segments.”