ADOTAS – At first glance, ValueClick’s stock seems to be on an unstoppable southward march. When rumors of its takeover by Microsoft (if its bid for Yahoo bombed) swirled, the stock temporarily rallied, but as it’s become increasingly clear that Microsoft isn’t going to snap the online marketing company up the stock lost its luster.
So the sell-off has continued – despite or perhaps due to another round of rumors that has it poised to acquire other ad companies itself. (The rumor du jour is that ValueClick will buy a PPC company to complement its own ad serving, affiliate marketing, search marketing and lead gen offerings).
ValueClick is no stranger to acquisitions. In 2000, the online ad company began its acquisition binge with onResponse and ClickAgents; in 2001 it snapped up ZMedia, Mediaplex/AdWare (AdWare is now Mediaplex Systems); in 2002 it bought Be Free; in 2003 it gobbled up Search123, Commission Junction and Hi-Speed Media; in 2004 it acquired PriceRunner; in 2005 it purchased Webclients, E-Babylon and Fastclick; in 2006 it snagged Shopping.net and last year, it absorbed MeziMedia.
During the company’s acquisitive phase, ValueClick seemed unstoppable. But with Google’s looming dominance in online advertising, an FTC investigation and its sliding stock, it’s becoming increasingly unclear where ValueClick stands, and many in the industry are playing the wait-and-see game until the dust clears (which isn’t going to help its stock prices).
“In 2007, it seemed like companies like VCLK were trading significantly higher after acquisition activity in the online advertising space overall was peaking, or peaked as it were,” an industry source, who preferred to remain anonymous, told ADOTAS. “VCLK was also rumored to be a strategic target for larger company’s, such as MSFT. I don’t know where the company is at now – acquirer or acquiree mentality – and how it might fit into their overall strategy. Performance marketing is stronger than ever right now compared to other sectors of online marketing so that is positive for their CPA business if they execute even remotely well, but we’ll have to see strategically where they feel the need to move next outside of that.”
But yet others say buy the stock now while the getting’s good. Banc of America Securities analyst Brian Pitz has maintained his investment opinion of ValueClick at “buy” but decreased his price target from $30 to $24. He also decreased his 2008 and 2009 EPS estimates.
Yesterday, ValueClick’s stock bottomed out at $13.06, but it’s already bounced back to $13.50 as of 12:44 p.m. (Its 52-week range is $13.06-$31.49). The stock is owned by 389 funds and institutions: 45.75% of those funds reported recently buying additional shares while 9.15% are maintaining their current share level and 45.09% are selling shares.
So on balance, the industry seems to be saying: buy.
ValueClick did not respond to our requests for comment at press time. Currently, its display ad network reaches about 75% of U.S. online consumers.