By Michael Elkins
Piper Sandler initiated coverage on DoubleVerify Holdings Inc (NYSE:DV) with an Overweight rating and $35.00 price target on the stock. DoubleVerify has outperformed the broader market, growing 36% in 2022 while calling for ~23% growth in their 2023 guidance. The company’s outperformance has been driven by a volume growth focus not tied to CPM movements, the early days of channel expansion into social, CTV, and retail media networks, and the ability to win new customers and upsell to existing customers.
Analysts wrote in a note, “DoubleVerify is a leading player in the verification of safety, security, and transparency of an ad transaction, as the company looks to deliver independent media quality and performance solutions to drive better outcomes for advertisers. We like the company’s positioning for both the macro uncertainty and the secular drivers of CTV and retail media. The diversified revenue stream, flat fixed transaction fee, volume model, and focus on brand safety have helped it outperform. In addition, the underpenetrated social channel represents another opportunity to drive outperformance. Finally, the company exhibits a strong ~30% adjusted EBITDA margin profile with a 20%+ growth profile this year. We recommend investors own DoubleVerify for exposure to the digital ad industry without the near-term concerns of CPM volatility and macro driven spending pressure.”
Year-to-date, DV is up ~37%, outperforming major indices to start the year. The company is now trading at ~23x EV/EBITDA based on Piper Sandler’s 2024 estimate, which is below its historical averages but ahead of other high growth and ad-tech peers.
“While the company is not immune to the macro, we see DoubleVerify as a unique way to have exposure to the digital advertising industry without the near-term CPM pressure and broader spend specific concerns,” wrote the analysts.
Shares of DV are up 2.19% in mid-day trading on Wednesday.