AOL Gets Its Second BUY Rating: Here's Why

AOL shares were up 4.6% today as the firm got its second “buy” rating, as Miller Tabak analyst David Joyce upgraded the firm. (AOL also has 11 hold ratings, 1 sell.) Joyce made the case for his bullish call on CNBC today (video below).

In short:

  • While 40% of AOL’s revenue is its shrinking dialup business, it’s getting 100% of its valuation from dialup, with no premium in the stock for its advertising and content businesses. Specifically, AOL is trading at 3X next year’s EBITDA, the same multiple as a couple of other dialup firms.
  • Still a huge web property with 107 million uniques.
  • AOL cut the fat this year (Bebo, ICQ, etc.) and now Joyce is expecting the ad business to grow next year.
  • Chances are high that AOL will still be independent in a few years. A lot of young people joining the company. And bullish on the new DEVIL ad platform.

To watch Joyce’s remarks, skip to the 1-minute mark in this video.

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