PubMatic initiated with a Buy at B. Riley

B. Riley analyst Daniel Day initiated coverage of PubMatic with a Buy rating and $20 price target. The market is overly focused on the near-term slowdown in ad spending, but while that downturn will likely pressure top-line growth, it will also accelerate the consolidation of spending onto SSPs that have the scale to negotiate supply path optimization deals with large buyers, the analyst tells investors in a research note. The firm is positive on PubMatic’s zero debt, healthy cash balance, solid through-cycle free cash flow generation, and a fixed cost base that should provide operating leverage once ad spending recovers.