alexsl/iStock via Getty Images
MediaAlpha (NYSE:MAX) stock gapped up 9% in Monday midafternoon trading, bringing its year-to-date gains to 94.3%, after BMO Capital Markets upgraded the insurance customer acquisition platform to Outperform from Market Perform.
Analyst Michael Zaremski is calling for an upward inflection in transaction value starting this year on the expectation that auto insurers will start to beef up "advertising-for-growth spend beyond sell-side expectations," he wrote in a note.
His 2025 estimate for P&C-related transaction value is $807M, more than 20% above MediaAlpha's (MAX) 2021 peak level.
That said, Zaremski boosted his MAX target price to $28 from $9, based on a ~25.6x 2025 estimated EV/adjusted EBITDA multiple. The increased price target "reflects expectations for Transaction Value + Adjusted EBITDA beat-and-raises to continue in the coming quarters and double-digit long-term secular growth prospects within the [direct-to-consumer] sandbox where MAX operates, partly offset MAX's less stable/predictable growth and EBITDA profile."
The Outperform rate diverges from the SA Quant system rating of Hold and agrees with the average Wall Street analyst rating of Buy.