First Analysis Uncomfortable With TubeMogul's Performance, Timeline For Bouncing Back

The issues highlighted by TubeMogul Inc’s TUBE 2Q performance and the lack of visibility into an expected timeline for recovery are major concern areas, First Analysis’ Craig Nankervis said in a report. He downgraded the rating on the company from Overweight to Equal-weight, while reducing the price target from $17 to $11.

Surprises In 2Q

The accelerating desktop decline and viewability taking center stage for the first time were surprising, Nankervis commented, while adding that this reduces the confidence in the company’s outlook.

Lack Of Certainty

Nankervis mentioned the areas of uncertainty as:

1. The timeline for third-party mobile viewability measurement to become reasonably widespread
2. Whether mobile viewability measurement would be able to offset the desktop decline being witnessed by the company.
3. In case viewability is so critical, “it continues to nag us why Google’s TrueView/YouTube pre-roll biz is skyrocketing. We know viewability was topical for YouTube last year, but it’s not clear to us how much it remains an issue. Even if viewability is a hesitation point for brands, it certainly appears to not be meaningfully curtailing TrueView/YouTube momentum,” the analyst wrote.

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