Skip to main content

Market Overview

Pair Trade Opportunity: BMO Upgrades Nielsen, Downgrades TubeMogul


In a couple of reports published Monday, BMO Capital Markets analysts Daniel Salmon, Nirav Modi and Ygal Arounian look into two media and internet stocks and provide an idea for a pair trade.

The experts recommend Nielsen NV (NYSE: NLSN), which they upgraded to Outperform from Market Perform, over TubeMogul Inc (NASDAQ: TUBE), which they downgraded to Market Perform from Outperform.

Nielsen ($53.00 Price Target)

The analysts like Nielsen on account of its revenue growth acceleration potential, which should, in turn, support multiple expansion. They anticipate constant-currency revenue growth of 5.4 percent for 2016, and 5.6 percent for 2017 – both up from a previous estimate of 5 percent.

The experts note that they have received “more encouraging comments from industry contacts highlighting both recent innovations like DAR and DCR, and that these products are becoming increasingly important elements of major contract renewals.”

From a qualitative standpoint, the broadly held view seems to be that Nielsen is “better addressing the needs of a changing media landscape. This was not the case as recently as 6-12 months ago, but as more customers begin to use the new products, the tone is changing,” the note explains.

The firm concludes, “the combination of accelerating revenue growth, consistent margin expansion, and judicious returns of capital (after tuck-in acquisitions) creates a compelling opportunity for value investors seeking consistent (and growing) dividends.”

TubeMogul ($15.00 Price Target)

TubeMogul is reporting its second quarter financial results on Monday evening. While BMO expects a strong quarter, even above estimates, it remains cautious as the competitive environment continues to change.

Many investors will be focusing on Google’s decision to remove YouTube inventory from the DoubleClick Ad Exchange, the analysts believe. However, they will be interested on what they consider a bigger competitive issue: the entrance of privately held Appnexus into the video buying marketplace.

Appnexus, possibly the largest independent ad tech platform in terms of total dollar flow, recently announced the launch of its new video offering, and feedback within the industry has been positive.

Moreover, the experts note, “Appnexus is well-known for operating at a low take-rate and is the only player in the broader ecosystem that has openly discussed single-digit rates to our knowledge. As importantly, Appnexus’s deep embedding at the agency holding companies (particularly WPP, which owns 15% of Appnexus) gives it the opportunity to quickly “turn on” video revenues through this installed base.”

So, while Salmon and his team “fully expect TubeMogul to continue innovating and succeeding,” the aforementioned factors lead them to a more cautious position.

Latest Ratings for TUBE

Nov 2016B. Riley FBRDowngradesBuyNeutral
Nov 2016CitigroupDowngradesBuyNeutral
Nov 2016Stephens & Co.DowngradesOverweightEqual-Weight

View More Analyst Ratings for TUBE
View the Latest Analyst Ratings


Related Articles (NLSN + TUBE)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas Upgrades Downgrades Price Target Analyst Ratings Movers Trading Ideas

Latest Ratings

STLB. Riley FBRDowngrades26.0
PDDChina RenaissanceDowngrades
OVIDCantor FitzgeraldDowngrades4.0
ESMorgan StanleyMaintains87.0
EIXMorgan StanleyMaintains73.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at