The majority owner of Tinder and Match is the 'unsung hero of the internet'
- InterActiveCorp owns more than 150 worldwide brands such as Match Group, ANGI Homeservices, and Vimeo.
- Match Group's Tinder is still in the early innings of monetization.
- Industry tailwinds and long-term international opportunity are favorable for ANGI Homeservices.
- Watch InterActiveCorp trade in real time here.
InterActiveCorp (IAC) is the "unsung hero of the internet" in the eyes of Jefferies analysts and shares will likely to soar due to the potential of the brands it owns in global media and the internet space. The firm says IAC shares are likely to soar 20% to $240 apiece.
"IAC remains a top mid-cap pick and despite recent outperformance we continue to believe the stock is undervalued," the group, led by Brent Thill, said in a note sent out to clients on Monday.
The internet company, with a $15 billion market cap, owns more than 150 brands. Among them are Match Group, which operates several US online dating sites including Tinder, and ANGI Homeservices, the world's largest digital marketplace for home services.
"Around 3.8 million paid Tinder subs is less than the incoming freshmen college class in the U.S. alone (4-5 million)," the team wrote.
"We continue to believe that Tinder remains in the early innings of monetization. Industry tailwinds are favorable for ANGI (90% of service requests are executed offline, around $400 billion domestic total addressable market) and the long-term international opportunity should help fuel future growth."
As of June 30, InterActiveCorp had 81.2% economic interest and 97.6% voting interest in Match Group. For ANGI Homeservices, InterActiveCorp had 86.4% economic interest and 98.5% voting interest, according to the company's second-quarter reports.
Jefferies is also bullish on InterActiveCorp's other brands - like Vimeo - which it says has a valuation lag. "Vimeo is the most interesting asset, but there hasn't been an inflection point for user growth," they wrote.
"Sub growth has been modest (low teen), but revenue growth has been better due to an increase in adjustable-rate preferred stock."
Jefferies estimates IAC's non MTCH/ANGI businesses (which trade at around a negative $4 billion value) will bring in more revenue this year than Redfin, Trade Desk, and Chegg combined.
The team raised its target price from $225 to $240, and maintained its "buy" rating.
InterActiveCorp shares are up 54% since this year.
