The New ANGI Homeservices Could Be The Beginning Of A New Market Leader

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Wells Fargo analyst
Peter Stabler
upgraded
ANGI Homeservices IncANGI
from Market Perform to Outperform and increased its target price from $12 to $14 in his first analyst note after a successful closing of the IAC - Angie's List transaction.

The price target is calculated by applying 19x full-year 2019 EV/EBITDA, 4.8 times full-year 2019 EV/Non-GAAP Sales and 61 times full-year 2019 GAAP EPS estimate of $0.23. Stabler believes these multiples are justified because of ANGI Homeservices' improved leadership position, large local digital opportunity and management track record.

The combined company is going to have a dual management for some time and although it is going to market both products in the short term, it is likely that the company is going to realize marketing expense synergies, thinks Stabler. Angie's List and HomeAdvisor are the market leaders in an industry with a significant potential for growth. Wells Fargo's customer survey from 2016 showed that only 20 percent of respondents have used an online service to locate a home service professional.

Stabler thinks the IAC's management team had strong M&A results, and he believes the leadership of ANGI Homeservices by the HomeAdvisor team is the best for the new company. He expects that management is going to focus on optimizing operation and on building a strong product pipeline in the short term. Over the long term, Stabler expects to see expansion to international markets, especially in the UK and Western Europe.

Related Link: Analyst Sees 21% Upside In ANGI HomeServices
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Posted In: Analyst ColorLong IdeasUpgradesPrice TargetAnalyst RatingsTrading IdeasPeter StablerWells Fargo
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