STRONG BUY*STRONG BUY TODAY* - from Virtus Advisory Group!!
Virtus Advisory Group December Newsletter to Investors
AcuityAds (TSX:AT)
Covered by: Canaccord, Haywood, Echelon, Paradigm, Cormark, VIII Capital
AcuityAds continues to capitalize on the tremendous momentum behind the name with a $23m bought-deal financing closing at the beginning of December. While the company has been able to capitalize on its strong operating leverage to fuel growth prior to this deal, management believes it is prudent to take capital that can help expedite growth heading into the new year, particularly given the demand they are seeing from illumin.
We remind our readers that Acuity had a strong Q3’20 quarter as advertising bounced back. Highlights from the quarter include:
Total revenue of $26.1m in Q3 2020 vs. $26.9m in Q3 2020, a decrease of 3% (Consensus: $23.8m)
Adjusted EBITDA of $4.0m in Q3 2020, an increase of 150% year over year (Consensus: $2.7m)
Positive operating cash flow of $6.7m for the quarter compared to $1.6m last year
Connected TV revenue up 353% year over year
The future of advertising continues to be programmatic – whether it be through online display or Connected TV. This belief, particularly from brands and advertisers, has only been expedited as a result of the COVID-19 pandemic and we are seeing more and more share of budgets shift to mediums like Acuity. As we look ahead into 2021, we anticipate this trend continuing.
We anticipate the next major milestone for Acuity to be a NASDAQ listing.
-While we do not have clarity on a [NASDAQ] date, management made it clear on their quarterly conference call that they would evaluate this opportunity and should it be in the best interest of investors that they would proceed. From our perspective, we believe Acuity will in fact go down this path as it opens up an entirely new audience of US retail and institutional investors.
Potential catalysts include:
Strong Q4 2020 financial performance
Strong adoption of illumin (the company’s new self-serve platform) by major brands
Continued profitability in 2021
NASDAQ listing
Potential M&A