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Advertising technology company Criteo (NASDAQ:CRTO) could be an attractive acquisition target with up to a 40% upside on a potential acquisition, according to a research report from DA Davidson earlier this month.
“As CRTO’s fastest-growing retail media business grows “At a higher/larger percentage of CRTO’s mix (18% of net revenue as of Q2’23), we expect CRTO to demonstrate that its business is more resilient to various regulatory/privacy impacts than in prior years,” DA Davidson analysts. he wrote in a wide-ranging report called “STAMPEDE” on November 13. “As a result, we believe the right buyer could be willing to pay between 6x and 8x forward EV/EBITDA for CRTO, implying a price of ~$36-$46 per share in a potential exit.”
A potential acquisition comes after Reuters reported in February that Criteo (CRTO) had hired banker Evercore to explore a sale of the ad tech company. Criteo is not new to speculation about takeaway acquisitions, and while previous efforts (especially in 2021) did not bear fruit, acquisition names have shown new interest in audience measurement and analytics (including the acquisition of Nielsen Holdings in October 2022 by Elliott Investment Management and Brookfield Business Partners).
Bloomberg reported in February 2021 that Criteo (CRTO) had sparked acquisition interest. The company has had acquisition interests before and advertising giant WPP (WPP) came close to buying Criteo in 2017.
Criteo (CRTO) did not comment on the Reuters report in February, nor did it do so in “any meaningful way” in the following months, according to DA Davidson.
Criteo (CRTO) could be an attractive target for strategic or private equity buyers due to its scale and relevance in the high-growth retail media and digital advertising space and strong free cash flow generation, according to DA Davidson analysis .
DA Davidson has a $27 price target for Criteo (CRTO), implying a 9% upside from current levels.
