KeyBanc Turns Bullish On Criteo, Says Q4 Print Confirms Growth Opportunity

Criteo SA (ADR) (NASDAQ: CRTO), a French digital performance marketing company, saw its stock soar higher by nearly 30 percent on Wednesday in reaction to its fourth-quarter results and prompted an equity analyst to upgrade the stock.

The Analyst

KeyBanc Capital Markets' Andy Hargreaves upgraded Criteo's stock rating from Sector Weight to Overweight with a newly established $50 price target.

The Thesis

Criteo said its Q4 revenue excluding traffic acquisition costs was $277 million, outrunning expectations of $263 million, Hargreaves said in the upgrade note. (See the analyst's track record here.) 

The revenue beat can be attributed to "solid performance" in the core re-targeting business and contributions from newer growth areas, the analyst said. The revenue beat also flowed down to the EBITDA line and demonstrated "consistent execution," he said. The negative impact from Apple Inc. (NASDAQ: AAPL)'s Intelligent Tracking Prevention was less than expected, according to KeyBanc. 

The European General Protection Data Regulation law will come online in May, and the impact to Criteo is "likely minimal," Hargreaves said. Criteo's existing method of obtaining consent from users is compliant with any changes, and the final text of the law is unlikely to favor the major U.S. internet companies, he said. 

Criteo's status as an expert at building platforms — ones that allow retailers and brands to leverage data at scale — should help the company see strong growth in its core business and develop new product lines, Hargreaves said. 

Price Action

Shares of Criteo were trading higher by 0.83 percent Thursday afternoon. 

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