InterActive Corp's Value-Creating Track Record Speaks For Itself

Citi's Mark Kelley initiated coverage of IAC/InterActiveCorp (NASDAQ: IAC) with a Buy rating and $89 price target as the company has established an impressive track record of generating shareholder value.

According to Kelley, IAC has proven itself to be a "shareholder value creation engine" and now boasts $1.3 billion in cash on its balance sheet along with a strong free cash flow generating mature business profile. As such, the company will be in an excellent position to continue generating value for shareholders through share buybacks and M&A activity.

Growth Drivers

Kelley also argued that IAC boasts two growth drivers in HomeAdvisor and Vimeo.

HomeAdvisor's growth continues to outperform its peers and the company's continued investments in the brand will continue to pay off. The analyst is also positive on the Vimeo business as the core SaaS offering for content providers creates a "stable base" with further upside as the company rolls out its over-the-top (OTT) offering.

Don't Forget About Tinder

IAC also owns around 210 million shares of Match Group Inc (NASDAQ: MTCH) and the Tinder platform still has room to grow.

In fact, Tinder is Match Group's fastest growing brand and will continue to be the main driver of growth in the near-term as it will account for 28 to 30 percent of EBITDA by 2018.

The analyst values Match at $22 per share.

The Bottom Line

Bottom line, Kelley argued IAC's track record "speaks for itself" and the company can use a combination of methods to continue generating shareholder value moving forward.

See Also:

IAC/InterActiveCorp: 'A Successful Past With A Brighter Future'

Match Group And Spark Networks: A Valentine's Day Case Study