Analyst Michael Zaremski from BMO Capital maintained a Buy rating on MediaAlpha (MAX – Research Report) and decreased the price target to $23.00 from $27.00.
Michael Zaremski has given his Buy rating due to a combination of factors influencing MediaAlpha’s potential growth. One of the key reasons is the anticipation that the company will be able to resolve the FTC inquiry regarding its Health segment without needing to raise equity capital, which would serve as a positive catalyst for the stock. Additionally, Zaremski believes that MediaAlpha’s first-quarter guidance is overly conservative and expects the actual results to be more profitable than projected.
Another factor contributing to the Buy rating is the expected increase in advertising spending by auto insurance companies, particularly Progressive, which is likely to boost MediaAlpha’s transaction value. Despite challenges in the P&C vertical affecting near-term profitability, the company is positioned for long-term growth within the direct-to-consumer auto insurance channel, which is projected to grow at a rate of 10-15%. This potential for growth, coupled with a valuation that reflects a lower multiple than historical averages, supports Zaremski’s positive outlook on the stock.
According to TipRanks, Zaremski is a 5-star analyst with an average return of 13.5% and a 77.07% success rate. Zaremski covers the Financial sector, focusing on stocks such as American International Group, Hanover Insurance, and Arthur J Gallagher & Co.