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Tuesday, Citi reiterated a Buy rating on IAC/InterActiveCorp (NASDAQ:IAC) with a steady price target of $58.00, as the stock trades near its 52-week low of $39.61. According to InvestingPro data, IAC appears undervalued, with analyst targets ranging from $48.50 to $105. The firm’s positive outlook is influenced by the recent Board approval for IAC to spin out its ANGI Homeservices (NASDAQ:ANGI) Inc. shares to its shareholders through a special dividend, a move anticipated to serve as a significant catalyst for the company.
The spin-out, approved on January 13, 2025, is expected to reveal the underlying value of IAC’s remaining assets, which analysts estimate to be approximately $300 million after accounting for its equity stakes in ANGI and MGM and its net debt. With a current market capitalization of $3.58 billion and EBITDA of $201.46 million, IAC maintains a healthy current ratio of 2.75, indicating strong liquidity. According to Citi, the current market valuation does not fully recognize the value of IAC’s diverse portfolio, which includes Dotdash Meredith (NYSE:MDP), a leading digital publishing asset, and potential growth opportunities with Care.com and the company’s Emerging segment.
Citi analysts suggest that the market is currently offering IAC shares at a discount, which could lead to a revaluation as the process of spinning off ANGI progresses. The firm believes that this move will not only shed light on the value of IAC’s core businesses but will also improve the company’s reported fundamentals by distancing it from ANGI’s continuing negative revenue growth. InvestingPro subscribers can access 8 additional key insights about IAC’s valuation and financial health, along with a comprehensive Pro Research Report that provides deep-dive analysis of the company’s fundamentals and growth prospects.
The upcoming spin-out is also seen as a strategic step that will allow IAC to concentrate on its core strength of creating value through mergers and acquisitions. IAC Chairman Barry Diller has indicated a desire to pursue more significant opportunities in this area, and the divestiture of ANGI shares is expected to free up resources and management focus to achieve this goal.
In summary, Citi’s reaffirmed Buy rating and price target reflect a confidence in IAC’s strategic plan to enhance shareholder value and optimize its business portfolio through the upcoming spin-out of ANGI shares.
In other recent news, IAC Inc. has extended its existing services agreement with Google (NASDAQ:GOOGL) until March 31, 2026, marking a significant development in their ongoing business relationship. The company also announced a leadership shakeup with Joey Levin stepping down as CEO to become the Executive Chairman at Angi, coinciding with IAC’s decision to spin off its entire stake in Angi. Analysts from Benchmark have maintained their Buy rating for IAC, while Piper Sandler downgraded the company’s rating to neutral.
In other developments, IAC has designated Care.com as a separate segment, providing investors with more detailed insights into the platform’s performance. The company’s subsidiary, Match Group (NASDAQ:MTCH), has initiated a quarterly dividend program and a new $1.5 billion share buyback authorization. Dotdash Meredith Inc., another IAC subsidiary, has successfully amended its credit agreement with JPMorgan Chase (NYSE:JPM) Bank, resulting in reduced interest rates for its term loans.
These recent developments come amidst expectations of future mergers and acquisitions, and a more active role for Barry Diller, IAC’s Senior Executive and Chairman. The completion of the Angi spin-off is anticipated in the first half of 2025.
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