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Many Upsides Drive Taboola, Opportunity to Stock Up?
Stock Analysis & Ideas

Many Upsides Drive Taboola, Opportunity to Stock Up?

Things are looking up for AI-powered platform provider Taboola (TBLA), as its Open Internet recommendation engine keeps gathering momentum. The company’s client roster is continuously growing, as are its viewers. Additionally, Taboola is also constantly adding new verticals and new sources of demand for its auctions, which in turn are attracting new clients and boosting revenues per page. This keeps me bullish on the company’s prospects.

Notably, Taboola has more than 13,000 advertisers on its platform, including the likes of BMW (BMWYY) and Intel (INTC). (See Taboola stock chart on TipRanks)

Recently, Needham analyst Laura Martin assessed the company’s possibilities and prospects and was encouraged by what she observed. “Taboola believes its data and AI algorithm advantages as the largest Open Internet recommendation engine make its yield (ie, higher click-through rates) ever harder to catch up with as time passes,” noted Martin.

The take rate, or the commission earned by Taboola from the advertisers for each ad, is around 35%, which is less than a typical Open Internet take rate of 50%. Additionally, for this take rate, the company offers its advertisers a variety of monetization capabilities and powerful data and AI algorithm advantages over other engines. This is another key driver for client growth.

Interestingly, Taboola’s personalization algorithms improve with the addition of clients, who bring more consumer data that feed the algorithm. This, in turn, results in improved ad targeting, which again pulls in more advertisers and boosts revenues per page for the website owner, bringing Taboola to the attention of more website owners.

The Open Internet advertising market is valued at $30 billion in the U.S.A. and $65 billion globally, excluding the heavyweights like Amazon (AMZN), Facebook (FB), Alphabet (GOOGL), YouTube, Snap (SNAP), Roku (ROKU), etc. This reflects the immense opportunity available for Taboola to grow further.

Martin assigned a Buy rating to Taboola, with a price target of $13. Wall Street’s views also seem to resonate with Martin’s optimistic sentiment, which is reflected in the consensus rating of Strong Buy for Taboola, based on 6 Buys. The average Taboola price target of $16 indicates an upside potential of 82.9%.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.

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