Criteo could be attractive takeover target with upside of 40% – analyst

Advertising tech firm Criteo (NASDAQ:CRTO) could be an attractive acquisition target with upside of as much as 40% in a potential takeover, according to a research report from DA Davidson earlier this month.

“As CRTO’s faster-growing Retail Media business grows a larger/larger percentage of CRTO’s mix (18% of net revenues as of 2Q’23), we expect CRTO to demonstrate that its business is more resilient to various privacy/ regulatory shocks than it has been in years past,” DA Davidson analysts wrote in a wide-ranging report called “STAMPEDE” on Nov. 13. “As a result, we believe the right buyer could be willing to pay between 6x-8x forward EV/EBITDA for CRTO, implying a price of ~$36- $46 per share in a potential take-out.”

A potential takeover comes after Reuters reported in February that Criteo (CRTO) had hired banker Evercore to explore a sale of the advertising tech firm. Criteo isn’t new to takeout speculation and though the previous efforts (notably in 2021) didn’t bear fruit, buyout names have shown some new interest in audience measurement and analytics (including the October 2022 acquisition of Nielsen Holdings by Elliott Investment Management and Brookfield Business Partners).

Bloomberg reported in February 2021 that Criteo (CRTO) had drawn takeover interest. The company has had acquisition interest before, and ad giant WPP (WPP) was close to buying Criteo in 2017.

Criteo (CRTO) didn’t comment on the Reuters report in February, nor has it in “any meaningful way” in the subsequent months, according to DA Davidson.

Criteo (CRTO) could be an attractive target for either strategic or private equity buyers due to its scale and relevance in the high-growth digital advertising and retail media space and its strong free cash flow generation, according to DA Davidson’s analysis.

DA Davidson has a $27 price target on Criteo (CRTO), implying 9% upside from current levels.