Perion Network Ltd.

PERI Details

Perion Network Ltd. (NASDAQ: PERI) is an Israel-based global technology company that provides brands, agencies, and publishers with online advertising and search solutions via desktop, mobile, and social platforms. Undertone, Codefuel, Makemereach, and Smilebox are some of the company's products and services. PERI's technological moat is strengthened even further by developing an integrated solution called "Capture and Convince," which represents a significant leap forward in the user funnel for the advertising industry. PERI generates its revenues through advertising and service agreements with its search partners.

Launched Shoppable High Impact Technology Solution: On August 24, 2021, PERI announced the launch of Shoppable High Impact, an innovative technology solution that allows shoppers to add products directly to a retailer's cart, with its collaboration with SmartCommerce, the provider of Click2Cart services.

Introduces Undertone's New Division: On June 17, 2021, Undertone, a subsidiary of PERI, launched a new retail marketing division under which the retailers can provide customized products at geographically responsive prices across an array of high-impact digital display devices on an item-by-item and bundled basis.

H1FY21 Results: The company reported a 57.84% rise in total revenues to USD 199.49 million during H1FY21 (ended June 30, 2021) compared to USD 126.39 million during H1FY20, due to an increase in both advertising and search revenues. In addition, PERI witnessed an increase in net income to USD 10.39 million during H1FY21 vs. a net loss of USD 0.91 million during H1FY20. As of June 30, 2021, its cash and cash equivalents (including short-term bank deposits) were USD 141.15 million, with no outstanding debt.

Key Risks: PERI's sales are focused on the North American market, which accounted for around 83% of its revenue in FY20. As a result, any major deterioration in North American economic circumstances might harm the company's operations and financial health. Further, PERI's search revenue is entirely dependent on publishers, who distribute its search services. Its top five publishers accounted for 36% and 22% of its revenue during FY19 and FY20. Excessive reliance on a small number of publishers for revenue could be detrimental to its financial health in the future.

Outlook: For FY21, PERI expects its revenues to range between USD 415 million and USD 430 million, with adjusted EBITDA ranging from USD 50 million to USD 51 million. For FY22, the company anticipates its revenue to be in the range of USD 490 million to USD 520 million, with adjusted EBITDA ranging from USD 59 million to USD 62 million.

Valuation Methodology: EV / EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

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

PERI Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: PERI's stock price surged 226.51% in the past twelve months and is currently at the mid-band of the 52-week range of USD 5.79 to USD 28.32. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 61.12. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 17.55. Considering the significant rise in the stock price, we believe the current trading levels adequately reflect the decent business fundamentals and hence, recommend a "Sell" rating on the stock at the current price of USD 19.95, up 2.41% as of August 26, 2021, 1:15 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The report has been partly sourced from REFINITIV.