The firm says the risk-reward profile for the company is more favorable. The stock has dropped by more than a quarter over the past three months.
"We view annual consensus as set very reasonably," analyst Matthew Thornton said.
Our updated (for SpotX acquisition) 2021 revenue/Ebitda is 2% to 6% above [consensus] (2022 is 3% to 13% above).
"With SpotX and the pullback ... we view valuation as more tenable."
Magnite paid $560 million cash and 14 million common shares to RTL Group in January to purchase SpotX, a connected TV and video advertising platform. The total value of the deal was about $1.17 billion.
Magnite is well positioned in the connected-TV advertising space, with secular growth in connected TV estimated to represent more than half the company's overall revenue by 2024, according to Thornton.
The firm expects 23% compounded annual growth in Magnite's CTV revenue. That estimate is supported by Truist's U.S. CTV market model, which shows higher programmatic and international growth and potential share gains.
"We continue to view MGNI as well-positioned on account of being scaled omnichannel (CTV and non-CTV video/display/audio/other), independent (no conflicts with publishers/clients or ad-buyers/demand-side platforms), and public (transparent financials and access to capital markets)," Thornton said.
Magnite shares at last check were 3.5% higher to $29.78.