Perion Network downgraded to Hold at Lake Street after Microsoft ‘body blow’

As previously reported, Lake Street downgraded Perion Network (PERI) to Hold from Buy with a price target of $16, down from $34, after Perion announced a Q1 miss and substantially lowered its revenue and AEBITDA forecast for 2024. Perion’s business model “took a body blow” when Microsoft (MSFT) changed its search pricing mechanism a few weeks ago by unilaterally lowering the RPMs charged to advertisers for indirect search traffic from Microsoft partners such as Perion, the analyst tells investors. The firm’s prior 2024 model had 47% of Perion revenue coming from the Search segment and over 80% of that Search revenue via Microsoft, but going forward from April 1, its new model anticipates 21% of revenue coming from the Search segment, the analyst noted.