Jefferies & Co.’s Youssef Squali Friday cut his rating on ValueClick (VCLK) to Hold from Buy in what was largely a valuation call. Citigroup made a similar call Thursday.
“The stock’s current valuation reflects an appropriate risk-reward profile for the business,” he says. Squali adds that the company remains an attractive acquisition target, “given consolidation in the space, its scarcity value and reasonable valuation,” but that he finds it difficult to maintain a Buy recommendation based only on a takeout thesis.
Squali ups his target on the stock to $27 from $25, reflecting a modest adjustment to his EPS estimates; he now sees 2007 profits of 75 cents, up from 74 cents, and 2008 EPS of $1, up from 98 cents.
In a more bullish note, Needham’s Mark May Friday morning raised his target price on the share to $33 from $27, and repeated his Buy rating on the stock. May shifted his valuation model to 17x forward earnings from 13x; he maintains EPS estimates of 86 cents for this year, $1.02 for next year.
Meanwhile, with Oracle’s (NYSE:ORCL) bid Friday morning for BEA (BEAS), following just a few days after SAP’s (NYSE:SAP) deal to buy Business Objects (BOBJ), both transactions which were widely rumored, I suspect other oft-discussed targets are going to get some extra attention from speculative-minded investors. And few stocks have been the subject of more M&A speculation than VCLK.
VCLK 1-yr chart: