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Perion Network Reports Another Beat And Raise Quarter - Buy

May 07, 2021 3:40 AM ETPerion Network Ltd. (PERI)31 Comments
Henrik Alex profile picture
Henrik Alex


  • Company reports Q1 results ahead of recently raised expectations and increases full-year guidance for a second time this year.
  • Recent follow-on offering and strong cash flow generation resulted in the company's cash position increasing to $128 million with the company being debt-free for the first time in years.
  • Guidance remains conservative with potential further upside from a rebound in travel-related advertising.
  • Management is confident of achieving its $500 million sales goal originally targeted for 2023 ahead of time.
  • Raising price target to $24 for approximately 50% upside from current levels. Investors should use the recent, broad-based weakness in technology stocks to scale into the shares or add to existing positions at a measured pace.

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In late 2020, I urged investors to consider a long position in shares of Perion Network (NASDAQ:PERI) or "Perion," an Israel-based provider of digital advertising solutions after the company raised H2/2020 guidance for the second time in two months.


This article was written by

Henrik Alex profile picture
I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.I am located in Germany and have worked quite some time as an auditor for PricewaterhouseCoopers before becoming a daytrader almost 20 years ago. During this time, I managed to successfully maneuver the burst of the dotcom bubble and the aftermath of the world trade center attacks as well as the subprime crisis.Despite not being a native speaker, I always try to deliver high quality research to followers and the entire Seeking Alpha community.

Analyst’s Disclosure: I am/we are long PERI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (31)

@Henrik Alex Want to thank you again for this article that brought my attention to this name. It has been a HUGE winner for me in both share price appreciation but also playing the very large option premiums available. I have had either monthly covered calls against shares or cash secured puts when shares have been called and am up at least 800% since this article. Only regret is that I shoulda bought more, much, much more. Thanks again buddy!
Just wanted to thank you again. Hope you keep writing articles for a long time :)
Any views on today's earnings? Looks like they will fall short of your rev forecast?
Henrik Alex profile picture

Not sure what you mean. Remember, they have two more quarters to outperform their conservative guidance.
@Henrik Alex i see thanks
Mbk85 profile picture
Seems like another good call from your side Henrik, congratulations. Are you staying bullish here until your price target is reached?
Henrik Alex profile picture

I remain bullish on the company's stock but near-term upside might be limited after the recent run. Some people appear to have known about this announcement last week already.
@Henrik Alex As you know I follow shipping more than tech, but I really enjoyed the write-up and bought a few thousand shares at $16 and change after reading this and doing some DD. The market still doesn't seem caught up to me on this one. Great call Henrik.
Henrik Alex profile picture
Company provides strong preliminary Q2 figures and raises EBITDA guidance significantly. Reiterating my buy rating and raising price target to $28.
Experts in this space,
Is PERI really the best of the breeds in this space? Please share your views? Thanks
Henrik Alex profile picture

Certainly not. Margins are much lower relative to pure play competitors but the search business provides rather stable contributions. The company executes well on all fronts and is very cheap relative to peers.
@kalu0003 yes they have been around since 1999
(1) putting valuations aside as of now; (2) acknowledging business differences among them; (3) looking at the quality of business/product: which one among these three in your view is a solid long term play: PERI, MGNI and PUBM? I regard your views as personal views and NOT as recommendations? Thank for your perspectives!
jonnyvern profile picture
@Henrik Alex You've been bang on so far, and if your earnings estimates are correct, look out above!

"$45-$50 million in adjusted EBITDA."

With about 50 million shares OS, that's $2 per share. Incredibly underpriced based on forward earnings.
jonnyvern profile picture
@jonnyvern1 Sorry, share count is 27 million per finviz. Still nearly $2 per share.
Henrik Alex profile picture

Share count is 33.66 million after the recent offering.
Jeremy Blum profile picture
Does anyone know why advertising surged in 4Q and dropped back to 3Q levels in 1Q?
Finnvestor77 profile picture
@Jeremy Blum Q4 is always the best quarter as most ad budgets are spent towards the end of the year. This Q1 has been surprisingly strong. It is also good to recall that travel industry forming 15% of historic revenues of Perion is still pending big ad spends.
Henrik Alex profile picture
@Jeremy Blum

Usual advertising industry pattern. Q4 has always the strongest retail sales events thus the budget flush.
Jeremy Blum profile picture
thanks Henrik and Finnvestor77.
SkiManJamie profile picture
I'd say the only flaw in their conservatism is their FY21 guidance implies 2H21 is below 2H20 and possibly below 2H19. I don't want them to be promotional and I don't mind them being conservative but I wonder if they are tuned in to aspects of their communications.
@SkiManJamie really?? 😳😳
SkiManJamie profile picture
@mehthakkar They did it last year too so I don't read much into it other than being oblivious to how investors and analysts interpret math. To quote Mariko from The Wolverine - "nothing is without meaning"

Last year at 2Q, their 2H20 guidance was 11-13m vs 19.8 in 2H19 then raised it to 16-18m before they reported 3Q20, still implying 2H down y/y. And in 3Q20 their EBITDA was 8.7 vs 7.6 in 3Q19 and left their guidance alone which implied 4Q would be down but then they reported 4Q20 15.3 vs 12.2.
Shamanski profile picture
I agree their overly conservative guidance is a fault.
It is hurting the stock too. That was a mistake.
Shamanski profile picture
The market doesn't see what PERI is doing, they have a lot of things to be happy about.

But they need to stop the overly conservative guidance, it is a fault right now.
Thanks for the update. Playing this with options and have done very nicely so far.

All the best!
Thank you for the updated guidance. I bought 1000 shares in the $12-$15 range when you recommended PERI last fall. I regret not selling more than a third of my position at $26, but I took the opportunity to rebuild it on the way down and bought some for my fiancee’s account this week.
Finnvestor77 profile picture
Nice summary! Perion is great example of the combined growth and value company and stock. I agree that they will very probably hit $450m+ revenue with the acquisition already this year. Their financial performance and profitability should enhance too quarter after quarter, which makes it steal at these price levels.
Dee-Lite profile picture
Personally I already bought the recent dip.
Great execution, relatively cheap valuation metrics, and solid balance sheet all make it for a heads win and tails not lose set-up.
Why not chipping in?
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