Benzinga | Jul 13, 2021 09:58AM EDT

Analysts Initiate Coverage On Tremor International Betting On Its Video Revenue Prospects

* JMP Securities analyst Ronald Josey initiated coverage of Tremor International Ltd (NASDAQ:TRMR) with an Outperform rating and a $30 price target, implying a 33.4% upside.

* The shares currently trading at 8.9x estimated 2022 EBITDA, a significant discount to peers with an average multiple of 64.7 times, implying minimal downside to shares given Tremor's exposure to video and its relatively clear view to consistent mid-to-high teens growth.

* Tremor was well-positioned to benefit from the tailwinds of the $149 billion of TV ad budgets that were following users online, Josey stated.

* Needham analyst Laura Martin initiated coverage of Tremor International with a Buy rating and $28 price target, signifying 24.5% upside.

* Martin loved that 68% of 2020 revenues came from video, including CTV. Additionally, Tremor had exclusive rights to some News Corp (NASDAQ: NWSA) video ad units through the end of 2022.

* However, Martin was worried that 10% of Tremor's revenue was shrinking.

* Raymond James analyst Andrew Marok initiated coverage of Tremor International with an Outperform rating and a $27 price target, implying a 20.1% upside.

* Marok saw multiple positive trends for Tremor, including attractive growth in the programmatic ad market, particularly in video and CTV formats, the firm's expectation for double-digit long-term revenue growth, and 35%+ EBITDA margins.

* Marok believed risk-reward was attractive at these levels given the company's valuation, which was a discount to similarly scaled open-web adtech peers.

* Stifel analyst John Egbert initiated coverage of Tremor International with a Buy rating and $26 price target, implying a 15.6% upside.

* Tremor's advertising technology platform for both digital advertisers and publishers on the open Internet focused on fast-growing opportunities within digital video and Connected TV (CTV) advertising.

* Tremor faced significant competition for ad spend from demand-side platforms operated by Alphabet Inc's (NASDAQ:GOOG) (NASDAQ:GOOGL), Google, and The Trade Desk Inc (NASDAQ:TTD).

* It also faced competition for access to premium video ad inventory from Magnite Inc (NASDAQ:MGNI) and PubMatic Inc (NASDAQ:PUBM).

* The company's profitability compares favorably to adtech peers, and Egbert expects Tremor to maintain about 40% adjusted EBITDA margins.

* Price action: TRMR shares traded lower by 1.78% at $22.09 in the market session on the last check Tuesday.