TubeMogul Inc (NASDAQ:TUBE) investors should be smiling from ear to ear today following the news that the advertising software maker will be acquired by Adobe Systems (NASDAQ:ADBE) for approximately $540 million net of debt and cash or $14 per share.
TubeMogul shares reacted to the good news, jumping 83% in pre-market trading Thursday.
Whether it’s episodic TV, indie films or Hollywood blockbusters, video consumption is exploding across every device and brands are following those eyeballs,” said Brad Rencher, executive vice president and general manager, digital marketing, Adobe. “With the acquisition of TubeMogul, Adobe will give customers a ‘one-stop shop’ for video advertising, providing even more strategic value for our Adobe Marketing Cloud customers.”
TubeMogul is a video demand-side platform (DSP) leader according to Forrester Research in its Q4 2015 Forrester Wave™ Video Advertising Demand Side Platform report. Adobe and TubeMogul share a long list of joint customers that will benefit from the integration of TubeMogul into Marketing Cloud solutions. Joint customers include Allstate, Johnson & Johnson, Kraft, Liberty Mutual, L’Oréal, Nickelodeon and Southwest Airlines.
“Adobe and TubeMogul share a similar culture and vision for the future of advertising,” said Brett Wilson, CEO and co-founder, TubeMogul. “The combination of Adobe Marketing Cloud with TubeMogul’s software creates a uniquely comprehensive platform that will help marketers always know what’s working — and act on it. We’re thrilled to call Adobe home and believe this will be a great move for our clients, team and shareholders.”
The transaction, which is expected to close during the first quarter of Adobe’s 2017 fiscal year, is subject to customary closing conditions. The potential financial impact to Adobe of this transaction is not reflected in financial targets previously provided by Adobe. Until the transaction closes, each company will continue to operate independently. Assuming the completion of the transaction, Adobe believes the acquisition of TubeMogul will be neutral to Adobe’s non-GAAP earnings in fiscal year 2017. Due to the absence at this time of certain acquisition-related cost estimates and purchase price accounting, Adobe is currently unable to provide an estimated impact on future GAAP earnings.
TubeMogul CEO Brett Wilson will continue to lead the TubeMogul team as part of Adobe’s Digital Marketing business. (Original Source)
On the ratings front, TubeMogul has been the subject of a number of recent research reports. In a report released yesterday, JMP analyst Ronald Josey reiterated a Hold rating on TUBE. Separately, on October 27, Albert Fried’s Richard Tullo downgraded the stock to Hold and has a price target of $14.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Ronald Josey and Richard Tullo have a yearly average return of 1.7% and a loss of 1.3% respectively. Josey has a success rate of 59% and is ranked #1398 out of 4205 analysts, while Tullo has a success rate of 52% and is ranked #3222.
Sentiment on the Street is mostly neutral on TUBE stock. Out of 5 analysts who cover the stock, 3 suggest a Hold rating and 2 recommend to Buy the stock. The 12-month average price target assigned to the stock is $15.00, which implies an upside of 96% from current levels.
TubeMogul, Inc. engages in the design, development, and marketing of software for digital branding. Its solutions include cross-channel advertising, premium ad inventory, and creative advertising services. It offers its platform through the Platform Direct, which which allows advertisers to continuously run campaigns through a self-serve model, and Platform Services, which allows advertisers to specify campaign objectives and its team execute the campaign on their behalf using the firm’s platform.