Criteo (CRTO) Stock Falling on iPhone Ad Blocking Report

NEW YORK (TheStreet) --Shares of Criteo SA (CRTO) are down by 7.31% to $46.97 in late afternoon trading on Thursday, following a report from the Financial Times suggesting Apple (AAPL) is working to allow iPhone users to block online advertising on its Safari web browser.

The move has the potential to hurt digital media companies, including Google (GOOGL), the Financial Times said.

Criteo is a global tech company that specializes in digital performance marketing.

Apple will release iOS 9 this fall and the updated operating system will include "Content Blocking Safari Extensions" which will allow users to block cookies, images, resources, pop-ups and other content, the Financial Times added.

Safari's desktop version has featured ad-blocking for several years but the new tool will allow iPhone users to download an app that would not only block advertising but also tracking technologies.

Ad-blocking on iPhones is cause for concern in the media industry as the demographic attracted to iPhones is considered to be more wealthy and therefore more desirable to advertisers, the Financial Times noted.

Separately, TheStreet Ratings team rates CRITEO SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CRITEO SA (CRTO) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 30.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although CRTO's debt-to-equity ratio of 0.03 is very low, it is currently higher than that of the industry average. To add to this, CRTO has a quick ratio of 2.17, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 38.88% is the gross profit margin for CRITEO SA which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CRTO's net profit margin of 7.84% significantly trails the industry average.
  • Powered by its strong earnings growth of 312.50% and other important driving factors, this stock has surged by 65.63% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • When compared to other companies in the Internet Software & Services industry and the overall market, CRITEO SA's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: CRTO Ratings Report

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