DA Davidson: Adtech company Criteo may become a potential acquisition target with an upside potential of 40%.

Zhitong App has learned that according to a research report by DA Davidson this month, advertising technology company Criteo (CRTO.US) may become an attractive acquisition target, with a potential acquisition price indicating a 40% upside.

Analysts at DA Davidson wrote in a comprehensive report called "STAMPEDE": "As Criteo's rapidly growing retail media business accounts for an increasing proportion of its portfolio (18% of net revenue as of the second quarter of 2023), we expect Criteo to demonstrate that its business is more resilient to various privacy/regulatory shocks than in the past few years. Therefore, we believe that suitable buyers may be willing to pay 6-8 times the forward EV/EBITDA for Criteo, which implies a potential acquisition price of about $36-46 per share."

It is understood that in February of this year, there were reports that Criteo had hired investment bank Evercore to explore a sale. In fact, speculation about the sale of Criteo is not new, and although previous efforts (especially in 2021) did not yield results, acquiring companies have shown some new interest in audience measurement and analytics businesses (including Elliott Investment Management and Brookfield Business Partners (BBU.US) acquiring Nielsen Holdings in October 2022).

Reports in February 2021 indicated that Criteo had attracted acquisition interest. The company has previously had interest in selling, with advertising giant WPP (WPP.US) coming close to acquiring Criteo in 2017.

DA Davidson stated that Criteo did not comment on the reports in February and has not made any "meaningful" comments since then.

According to DA Davidson's analysis, Criteo may be an attractive target for strategic or private equity buyers due to its scale and relevance in the high-growth digital advertising and retail media sectors, as well as its strong free cash flow.

Currently, DA Davidson has a target price of $27 for Criteo, which implies a 9% upside from the current level.

Criteo is a global technology company specializing in digital performance advertising. The company represents its advertising clients in effectively attracting and converting customers using a wealth of detailed data. The company uses proprietary predictive software algorithms and deep insights to represent consumer intent and purchasing habits in pricing and delivery, with highly targeted and personalized digital advertising performance across all devices.