Loop Capital Initiates Coverage On Quotient With Buy Rating, $16 Target

Loop Capital’s Blake Harper believes the ability of Quotient Technology Inc QUOT to expand with its existing retailer customers would be the key driver of continued upside to its revenue growth outlook for 2016.

Harper initiated coverage of the company with a Buy rating and price target of $16.

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Although the stock valuation is in line with peers, the analyst believes it deserves a premium multiple, based on the company’s ability to beat growth expectations in 2016 and 2017.

“With the launch of Retailer iQ and data/anlaytic services called Insights, the company is transitioning to a more valuable provider of information on consumers’ buying habits,” Harper mentioned

Retailer iQ

Although the ramps at some of Quotient Technology’s Retailer iQ customers has been slower than expected, the business has begun to accelerate in 2016.

The company’s digital paperless coupons increased more than 80 percent year-on-year in 2Q16, from 26 percent in 3Q15, “when digital paperless overtook digital print coupons as the majority of revenues,” the analyst stated.

Mobile App

In addition, Quotient Technology has acquired Paris-based mobile app Shopmium in order to have its own mobile consumer service to connect brands to more data on their consumer.

According to the Loop Capital report, “The app could benefit from more U.S. content, including exclusive deals, to entice more of the 97 million U.S. consumers estimated to have used mobile coupons in 2015.”

The company is expected to generation $3-$5 million in revenue in 2016.

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