On Thursday, Oppenheimer adjusted its outlook on IAC/InterActiveCorp (NASDAQ:IAC), increasing the firm's price target on the stock to $75 from the previous $65, while keeping an Outperform rating. The revision comes as Oppenheimer removes the holding company discount from IAC's public assets. The firm's analyst cites management's reiteration of its 2024 EBITDA guidance, with expectations leaning towards the higher end, driven by ongoing improvements at Dotdash/ANGI.
IAC reported first-quarter revenues that met expectations, with EBITDA surpassing estimates by $23 million and $21 million, respectively. Dotdash Core Sessions saw an 8% year-over-year increase, slightly down from the fourth quarter's 10% growth, yet still showing strength in premium and programmatic sales. A partnership with OpenAI is set to embed Dotdash content and links within response outputs, which is anticipated to generate additional revenue for IAC.
The collaboration with OpenAI is also aimed at enhancing Dotdash's D/Cipher, a cookieless ad targeting tool, and involves training OpenAI's language models using the Dotdash content library, for which a licensing fee will be paid. The analyst anticipates that Dotdash's margins will show year-over-year improvements in 2024, with digital growth expected to exceed 10%. ANGI's monetized transactions per service request have increased by 24% year-over-year, and when combined with reduced costs, indicate better unit economics.
In addition to the financial forecasts, management has expressed a growing interest in share buybacks, marking a shift from previous quarters. Oppenheimer's new price target is based on a multiple of 10 times, 8 times, and 4 times the projected 2024 EBITDA for ANGI, Dotdash, and Search segments, respectively. This optimistic outlook reflects the analyst's confidence in IAC's strategic initiatives and potential for growth in the coming year.
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