Over the summer, while you were sheltering in place, baking, and watching
completed the distribution of its majority stake in the dating business
Prior to that transaction, Match accounted for a vast majority of IAC’s market valuation. In effect, investors in the remaining stub of IAC now own shares of an entirely different company, but one with the same strategy of incubating a portfolio of emerging digital businesses.
With Match out of the way, the company’s (ticker: IAC) biggest asset is now its 85% stake in
(ANGI), the business that readers may remember as Angie’s List, connecting consumers with home-service providers. But there’s more to the company than that, and an argument that Wall Street doesn’t grasp the value of the post-Match IAC.
On Thursday, Credit Suisse analyst Yoni Yadgaran picked up coverage of IAC and ANGI, giving both Outperform ratings. (The firm is switching analysts on IAC, and covering ANGI for the first time.) He raised the firm’s target for IAC’s stock price to $190, from $160, and set a $19 target on ANGI.
That makes him the biggest bull on the Street on both stocks. In Thursday trading, IAC shares were up 1.5%, to $125.16, while ANGI rose 3.2%, to $11.
Yadgaran reported that he did a detailed dive on IAC’s portfolio and found “hidden value pointing to 30% upside, even when setting aside upside potential from ANGI.” IAC’s holdings offer exposure to multiple attractive markets for a company that has shown it knows how to take advantage of opportunities in deploying capital, he wrote. The ANGI stake offers “another way to gain exposure to a large, underpenetrated [total addressable market] with multiple secular tailwinds,” he said
Based on estimated 2021 results, he values the company’s assets this way:
- ANGI, $85 per IAC share
- Vimeo, the company’s video tools business, at $33 a share
- Dotdash, a collection of vertical content websites, at $21
- Search, which includes Ask.com, at $6
- Emerging businesses, also at $6
- Nonoperating assets, including the company’s 25% stake in the car-sharing service Turo and a 12% stake in the casino company MGM, plus net cash, at $54 a share.
Add that up, and back out some corporate overhead, and you get $199 a share. The total drops to $158 based on the current price for ANGI shares, but Yadgaran said that stock is undervalued, too.
In a note on ANGI, Yadgaran said his bullish case has three primary parts. For one, he is bullish on the company’s shift from a lead-generation model to fixed-price services. (With the new model, consumers know what the plumber is going to cost before he shows up.)
He also noted that supply constraints have been an issue during the pandemic, with many providers in high demand. The analyst sees a huge market—$900 billion—with few competitors, describing home services “as one of the few remaining major consumer spend verticals yet to migrate to digital.”
Demographic trends are positive as well, he said, with “a generational wave of Millennial users who have only recently come to market as first time home buyers and have clearly demonstrated a propensity to leverage online tools to make major purchase decisions.”
Write to Eric J. Savitz at firstname.lastname@example.org