Analyst Note| Ali Mogharabi |
We are maintaining our $41 fair value estimate on no-moat 4-star-rated Criteo. While Criteo’s retargeting offering is still pressured with minimal recovery expected in the near term, we remain impressed with the headway that the firm is making in retail media, which we project will grow faster than the overall digital advertising. Criteo is also strengthening its position as both a supply and demand side platform provider within retail media as it continues to utilize its clients’ first-party data to not only monetize its online properties, but also more effectively market its offerings to consumers. We also expect increasing net revenue contribution from small and medium-size businesses from the firm’s Shopify partnership. While it appears that Criteo is also targeting connected TV through its Magnite partnership, we believe the upside on that front is limited in the short to medium term until connected TV ad buyers begin to focus more heavily on purchasing inventory for the bottom-of-the-funnel campaigns.