UPDATE: Evercore Upgrades AOL

Evercore upgraded AOL, Inc. AOL to Buy with a $48 price target in a report issued Wednesday.

Analysts led by Andrew McNellis noted that "assuming no change to AOL's ad market share, we still see the potential for continued OIBDA outperformance if the company can scale margins in the non-Membership segments to just 10 percent of rev, about half that of the average of comparable content or ad tech companies like Conversant, Criteo, IAC, or Yahoo, which we see as achievable over the next three years."

"Risks include 1) Declining ROI in the search arbitrage business, which contributes substantial profits to the company’s Brand Group, and 2) Advertisers’ move towards deterministic data sets, highlighted by Facebook’s Atlas re-launch last month, and which AOL lacks in comparison," according to McNellis.

The report assigned "a $48 target, $20 per share for the secularly challenged Membership Group, or 3.5x 2016 OIBDA, and $28 per share for the combined Brand and Platform Businesses, or 15x ’16 OIBDA, which we see as compelling value in context of our estimate for 30 percent+ bottom-line growth in this segment through fairly conservative revenue and margin leverage assumptions."

AOL, Inc. recently traded at $41.24, up 1.25 percent.