Angie’s List Update Target Price $ 22

ANGI : NASDAQ : US$15.45
HOLD 
Target: US$22.00

COMPANY DESCRIPTION:
Founded in 1995, Angie’s List is a leading online destination for consumers looking for service providers in more than 550 categories and three main verticals of home repair & maintenance, health care and auto service.

Technology — Internet
SLIGHTLY SOFT Q3 RESULTS
Summary
After a stock decline of over 30% in the past month, Angie’s List reported Q3 results that were slightly below consensus on most key metrics, including a 1% revenue miss and a $2 million miss on EBITDA.
While some investors may be extrapolating these slight misses far out into the future, we believe the low magnitude of the variance demonstrates the mostly stable nature of Angie’s model. That said, we believe the stock may struggle to find sponsorship until key metrics turn back up.
Key points
 Bullish: The mix of SP revenue seemed skewed more favorably toward renewal business, as evidenced by lower selling expense; eCommerce revenue grew much faster than overall revenue.
 Bearish: CPA of $76 was less efficient than our $73 estimate; paid member net adds missed our estimate despite higher CPA; service provider adds missed our estimate as did SP revenue; Q4 guidance for revenue of $68-69 million was below consensus.
 Estimate changes: We are slightly lowering our projections for 2013-15. Our non-GAAP EPS estimates for 2013, 2014, and 2015 go to $(0.34), $0.39, and $1.06 from $(0.21), $0.52 and $1.14.
Valuation
We lower our price target to $22 (down from $25), which is based on 28x (down from 30x) our new 2015 EPS estimate of $1.06 (down from $1.14), discounted at a rate of 12.7%.

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