IAC/InterActiveCorp

IAC Details

IAC/InterActiveCorp (NASDAQ: IAC) is a holding company for digital media and the internet. It owns and operates several public firms worldwide, and it now earns revenue from four segments. 1) Angi Inc., that connects home service experts with customers, 2) Dotdash, a digital publishing brand portfolio that provides information on specific vertical content categories, 3) Search, comprising a cluster of websites offering general search services and direct-to-consumer downloadable desktop applications and 4) Emerging & Other, which includes Care.com, Mosaic Group, Bluecrew, etc.

Latest News:

• Latest Investment: On April 26, 2022, Vivian Health, an IAC company and a leading healthcare jobs marketplace serving healthcare professionals first, announced today a USD 60 million primary and secondary equity investment led by Thoma Bravo, a leading software investment firm, with participation from IAC and Collaborative Fund. Vivian will use the fresh funds to accelerate its rapid development and scalability among healthcare clinicians and employers, as well as to fund future M&A projects.

Q1FY22 Results:

• Growth in Topline: The company reported a YoY increase of 33.82% in overall revenue to USD 3.70 billion in FY21 (ended December 31, 2021) from USD 2.76 billion in FY20, attributable to 665% growth in Total Dotdash Meredith segment.
• Reported Losses: In Q1FY22, IAC reported net losses of USD 235.80 million compared to profit of USD 329.13 million in Q1FY21.
• Cash and Debt Position: The company had USD 1.91 billion in cash and cash equivalents as of March 31, 2022, and total debt of USD 2.07 billion.

Key Risk:

• Dependence on Dotdash: Online advertising (Dotdash and Search industries) contributes a substantial share of revenue; however, it reduces advertising expenditures or customer confidence, and discretionary spending could harm IAC's business.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation:

IAC's stock price has fallen 37.35% in the past nine months and is currently leaning towards the lower end of its 52-week range of USD 72.29 to USD 179.12. We have valued the stock using the Price/Sales Per Share Value-based relative valuation methodology and arrived at a target price of USD 88.88.

Considering the significant correction in the stock price, strategic investments, associated risks, and current valuation. We recommend a "Hold" rating on the stock at the current price of USD 79.47, down 3.21% as of May 18, 2022, at 12:31 PM PDT.

Three-Year Technical Price Chart (as of May 18, 2022, at 12:31 PM PDT). Source: REFINITIV, Analysis by Kalkine Group

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: All forecasted figures and industry information have been taken from REFINITIV.  

Note 3: The report publishing date is as per the Pacific Time Zone.

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