IAC Soars 14% On Vimeo Spin-Off Plan; Oppenheimer Lifts PT

Shares of IAC/InterActiveCorp spiked 14.1% on Tuesday after the media and internet company announced plans to spin off its ownership in video software company Vimeo.

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IAC (IAC) said that following the spin-off, Vimeo will become a separately-traded public company. The proposed spin-off is still awaiting final approval by IAC’s board.

The company said that the proposed spin-off will be reviewed during a shareholder meeting scheduled for the first quarter of 2021. IAC expects to approve the transaction in the second quarter of 2021.

IAC’s CEO Joey Levin said, “The combination of Vimeo’s remarkable growth, solid leadership position, and enormous market opportunity have made clear its future.” He added, “It’s time for Vimeo to spread its wings and become a great independent public company.” (See IAC stock analysis on TipRanks)

Following the Vimeo spin-off proposal, Oppenheimer analyst Jason Helfstein lifted the stock’s price target to $210 (14.3% upside potential) from $150 and maintained a Buy rating. The analyst said, “As a result of the deal, we believe Vimeo will be worth ~$6.3B, implying 17.0x ’21E EV/revenue.” He added that, “In our view, 17.0x is achievable as Vimeo is growing ’20E-’22E revenue at 29.2%, 9% faster than the comparable group, with investors also showing a willingness to pay for mid-cap SaaS companies.”

Currently, most of the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 14 unanimous Buys. The average price target stands at $182.71 and implies that the shares are fully priced at current levels. Shares have gained 72.2% since the company separated from the Match Group and started trading on NASDAQ on July 1 this year.