MeetMe Gets Aggressive With M&A; Multiple Catalysts Still Exist

JMP Securities reaffirmed its Market Outperform rating on MeetMe Inc MEET on in-line fourth-quarter results and the firm's upbeat opinion on the company’s deal to buy if(we) for $60 million.

If(we) owns Tagged and hi5 apps designed to facilitate meeting new people and chatting, with a combined mobile active user figure of about 800,000 and generating about $44 million revenue in 2016.

Analyst's Commentary

“With the acquisition of if(we), MeetMe gains scale, adds users and broadens its portfolio of apps,” analyst Andrew Boone wrote in a note.

Boone, who has a price target of $9 on MeetMe shares, also believes the company will become more aggressive over broadening of its apps via M&A due to scale advantages and attractive valuations.

Meanwhile, the company’s fourth-quarter results were mostly in line, despite 2017 forecast for revenue and EBITDA came in below the analyst’s view at the mid-point. That said, the analyst is positive that the company is investing in products such as video, focusing more on marketing and international monetization.

Looking Forward

For 2017, Boone expects PF EPS of $0.61 on revenue of $129.5 million, which represents growth of 70 percent year-over-year.

“To summarize, we are positive on the acquisition of if(we) and believe that multiple catalysts exist for MeetMe, such as enabling chat between apps in 1H17 and the launch of its live video broadcasting product in the 2Q17,” Boone added.

Shares of MeetMe closed Monday’s regular trading session at $5.07. In the pre-market hours, the shares surged 27.22 percent to $6.45.

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