Barrington Research Sees Strong Q4/14 Results For Angie's List

In a report published Thursday, Barrington Research analyst Jeff Houston reiterated an Outperform rating and $10.00 price target on Angie's List Inc. (NASDAQ: ANGI).

In the report, Jeff Houston noted, "We maintain our OUTPERFORM investment rating and $10 price target. The company is successfully transitioning to a marketplace, which has required a change in its sales strategy and fine‐ tuning of its product. The company is poised to improve profitability significantly in 2015 and 2016, which has been underappreciated by investors, driven by the higher percentage of SP revenue generated by renewal contracts that carry an 80‐85% profit margin, dramatically higher than first‐year‐contract margins of 0‐5%. We also like Angie's revenue visibility, differentiated offering, ability to increase advertising prices, operating leverage, and new monetization initiatives (i.e., $10‐15 billion of transactions and non‐paying SPs). Furthermore, valuation is still attractive after today's 50% increase with a 2016 EV/Revenue of about 1.0x and it is a takeout candidate, in our view."

Angie's List closed on Wednesday at $7.80.