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Vimeo Sinks in First Day of Trading After Spinning Off From IAC

KeyBanc Capital Markets initiated coverage of Vimeo with a sector weight rating, pointing to strong potential but a full valuation.
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Vimeo  (VMEO)  shares fell sharply in their first day of trading on the Nasdaq Tuesday, after the video streaming service was spun off by media titan IAC  (IAC) .

Vimeo recently traded at $42.31, down 18.8%.

KeyBanc Capital Markets analyst Justin Patterson initiated coverage of Vimeo with a sector weight rating. The company has strong potential, but that’s already priced in to its valuation, Patterson said, according to Bloomberg.

“It will take further progress in the enterprise and growth closer to 40% to drive further multiple expansion,” Patterson wrote. To be sure, expansion in the enterprise sector “may be masked by decelerating 2021 revenue growth,” he said.

As for IAC, it recently traded at $172, up 2.3%. JPMorgan sees a trading range of $159 to $170 for the stock.

Morningstar analyst Ali Mogharabi puts fair value at only $110, though he likes IAC.

“Demand for Vimeo’s software continues to increase, a trend we think will remain over the next few years as adoption by businesses of all sizes increases,” he wrote earlier in the month.

Mogharabi noted that “the Angi home services aggregator is also showing early signs of accelerating revenue growth, while Dotdash continues to attract increasing digital ad dollars. However, based on our cash flow expectations …, we believe IAC remains overvalued.”

In other media news, founder Jim Cramer explained why he still believes in Disney  (DIS)  earlier this month.

And last week, Bank of America double upgraded ViacomCBS  (VIACA)  to buy from underperform and raised its share-price target to $53 from $38.