Social Reality Wins A Buy Rating, $9 Price Target From Chardan

Chardan Capital started coverage of Social Reality Inc SRAX with a Buy rating and $9 price target, as it expects the company’s revenue and margins to grow from an expanded sales force and new products.

The brokerage expects the rebound in gross and EBITDA margin in the fourth quarter to sustain in 2017 given that the large contract has been re-negotiated and downsized.

“With gross margin returning to a more normal 40-45% over the coming quarters, we think EBITDA margin can improve from a negative level in 2016 to 7% in 2017 and 14% in 2018,” Chardan analysts wrote in a note.

Social Reality provides tools to advertisers and publishers in the Real-time bidding (RTB) market, which is part of the $22 billion U.S. programmatic adverting industry, a subset of total digital advertising.

According to a report on Research and Markets, the global programmatic advertising display market to grow at a CAGR of 18.09 percent during the period 2017-2021.

The company’s RTB platform includes an Ad Exchange (SRAX), a sell-side platform (SSP) for publishers to more effectively manage their inventory, and a demand side platform (DSP) for ad agencies.

“This year the company should benefit from an expanded sales force, new products in the SSP and the dramatic growth of the company's SRAX MD unit,” the analysts added.

The analysts also noted that Social Reality could be active in the M&A market amid rapid advancements in the technology.

At last check, shares of Social Reality climbed 12.59 percent to $3.22. The $9 price target implies potential return of 179 percent over the current levels.