On Wednesday, RBC Capital Markets adjusted its price target for ANGI Homeservices (NASDAQ: NASDAQ:ANGI), reducing it to $2.75 from the previous $3.25, while maintaining a Sector Perform rating on the stock.
The revision comes in the wake of ANGI's third-quarter results, which the firm described as mixed. Alongside the quarterly report, there was an announcement from IAC management regarding the potential spin-off of ANGI from IAC's current approximately 85% ownership.
The decision by RBC Capital to lower the price target reflects concerns about ANGI HomeServices' ability to reverse a trend of declining revenues. The analyst noted that while the company is performing well in terms of traffic acquisition, job quality, and service provider retention, there is a need for greater visibility and a more significant turnaround before considering a more positive adjustment to the stock's rating.
The potential spin-off by IAC is seen as a move that might not instill confidence in ANGI's ability to improve its financial performance. The analyst reiterated the Sector Perform rating, signaling a neutral outlook on the stock's prospects. Despite the solid progress in certain operational areas, the lowered estimates and price target indicate a cautious approach to ANGI HomeServices' near-term growth potential.
The market will continue to watch ANGI HomeServices' strategic decisions, particularly in light of IAC's exploration of a spin-off, which could have significant implications for the company's structure and strategy moving forward. The lowered price target to $2.75 reflects the current assessment of ANGI's value based on the available financial data and market conditions.
In other recent news, ANGI Homeservices has been facing significant changes. Citi and Goldman Sachs (NYSE:GS) have both downgraded the company's stock from Buy to Neutral, citing a prolonged turnaround and ongoing revenue challenges respectively.
These decisions follow ANGI's third-quarter results, which showed a consolidated revenue drop of over 15% year-over-year. Despite this, ANGI's international segment, particularly in Europe, has shown resilience with a 15% year-over-year revenue increase. The company's management expects positive results from its operational turnaround efforts in 2026.
IAC/InterActiveCorp (NASDAQ:IAC), on the other hand, anticipates a revenue decline in early 2025 due to new FCC (BME:FCC) regulations but expects sequential growth afterward. The company is also optimistic about leveraging OpenAI technology to enhance advertising capabilities and sees a strategic pivot towards long-term investments in customer experience and digital capabilities.
Analysts from various firms have noted these recent developments and the potential for growth in digital advertising revenue. However, they also point out a potential slowdown in advertising spending and a decline in the service pro base due to a focus on low-profitability acquisitions.
InvestingPro Insights
ANGI Homeservices' recent performance and market position are further illuminated by real-time data from InvestingPro. The company's market capitalization stands at $959.73 million, reflecting its current valuation in the market. Despite the challenges highlighted in the article, ANGI's P/E ratio (adjusted) of 24.14 for the last twelve months as of Q3 2024 suggests that investors are still pricing in some growth expectations.
InvestingPro Tips point out that ANGI is trading at a low P/E ratio relative to its near-term earnings growth, which could indicate potential undervaluation. This aligns with the article's mention of the company's solid progress in certain operational areas. Additionally, analysts anticipate that net income is expected to grow this year, which could be a positive sign for investors looking for turnaround potential.
However, the stock has taken a significant hit recently, with a 23.72% decline in the past week and a 24.9% drop over the last month. This downward trend is consistent with the cautious outlook expressed by RBC Capital Markets and their decision to lower the price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for ANGI Homeservices, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.