So much for IAC’s exciting new break-up strategy. Citing the following problems, Citi analyst Mark Mahaney throws the company’s stock on the “Hold”-rated scrap heap:
- IAC will continue to lose market share in core businesses.
- New product innovation/new revenue streams not near-term catalysts
- Limited exposure to international markets (13% of revenue)
- Few counter-cyclical hedges against a US slowdown
Mahaney’s $29 target is 7X 2009 estimated EBITDA of $1.2 billion (adjusting for $900 million of YE’08 net cash). The break-up, he thinks, will act as an overhang for 6-9 months.
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