RBC: Bankrate 'Controls Its Destiny' And Is Reasonably Priced

Jordan Rohan, an analyst with RBC Capital, this morning raised his rating on Bankrate (RATE) to Outperform from Sector Perform, and increased his price target on the stock to $36 from $34. Bankrate is an ad-supported site which provides comparison information on mortgages, credit cards and other financial services. Rohan cited four reasons for his call:

• RATE’s platform is demonstrating pricing power, with the October rate increase flowing through with minimal advertiser attrition.
• Initial efforts to increase traffic through paid search have been very effective, with return on advertising spend between 80%-100%.
• RATE continues to see traction among deposit-focused advertisers, shifting revenue mix beyond mortgage category.
• Refinance loan volumes, which drive the highest converion rate for RATE advertisers, have stabilized recently, up 40% from the July low.

He contends that RATE’s valuation, trading at 12x 2007 EBITDA and 9x 2008 EBITDA, “is among the most reasonable in the Internet universe…RATE is one of the only premium vertically-focused destinations for finance related advertisers, and one of the only small cap Internet companies that can generally control its own destiny from quarter to quarter.”

Bankrate shares today have jumped $3.95 to $35.63.