It’s a very rewarding trading day for investors in Angie’s List Inc (NASDAQ:ANGI) with shares up nearly 55%, making the stock Wall Street’s bull of the day. The reason? The consumer reviews company announced a definitive agreement to merge with IAC’s HomeAdvisor division at $8.50 a share in cash and stock. Going forward, IAC will own 87%-90% of ANGI’s stock, with the remaining being publicly traded. HomeAdvisor CEO Chris Terrill will run the consolidated entity, with two of ANGI’s board members joining the new board.
Wells Fargo analyst Peter Stabler commented, “As we’ve noted many times previously, we view the scale of the local Home Services opportunity as large. By merging Angie’sList and HomeAdvisor, we see an opportunity to leverage the very high unaided brand awareness and preference of Angie’sList (44% according to our most recent survey), with the strong momentum seen at HomeAdvisor in expanding its service provider network, rolling out new mobile solutions, and efficiently monetizing consumer commercial intent signals.”
Jefferies analyst Brian Fitzgerald added, “We are positive on the announcement as we believe the deal positions IAC as the premier player in the Home Services marketplace ($400B domestic market). The deal allows IAC to build off their long history of expertise in strategic M&A as they address a market with significant growth potential (90% of home service requests are still executed offline). International growth adds further upside, with HomeAdvisor recently making moves into the UK, Canada, and Germany. Management believes there is a nice path for growth in Europe, with a TAM of roughly the same size as the U.S.”
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Peter Stable and Brian Fitzgerald have a yearly average return of 22.9% and 18.9% respectively. Stable has a success rate of 78% and is ranked #281 out of 4569 analysts, while Fitzgerald has a success rate of 80% and is ranked #24.
Sentiment on the street is mostly neutral on ANGI stock. Out of 4 analysts who cover the stock, 2 suggest a Hold rating , one suggests a Sell and one recommends to Buy the stock. The 12-month average price target assigned to the stock is $8.00, which implies a downside of 12% from current levels.
Angie’s List, Inc. engages in collections of consumer reviews on local service providers ranging from home improvement to healthcare. It operates as consumer driven solution for its members to research, hire, rate and review local professionals for critical needs, such as home, health care and automotive services.