BMO Capital Upgrades Rocket Fuel (FUEL) to Outperform

BMO Capital upgraded Rocket Fuel (NASDAQ: FUEL) from Market Perform to Outperform with a price target of $58, saying concerns over take-rate pressure is overdone.

Analyst Dan Salmon comments, "The last month of investor conversations on the ad tech space appear to us to be overly focused on take-rate pressure, or at least near-term take-rate pressure. Many investors view the group—especially FUEL, which has the highest take rate among peers at ~55%—as inevitably seeing their cut of the spending that flows through their platforms decline. These are well-grounded concerns and, as we have written regularly, we share those concerns across industry, especially over the mid- to long-term. But the consensus seems to be overlooking the market opportunity right now. Today, programmatic execution and real-time bidding is only just beginning to approach something resembling maturity in its original addressable market, which is static banner display ads. It is just beginning to enter the mobile space, where Rocket Fuel now generates 19% of its revenue, and in the online video space, real-time bidding is also in its infancy. We also expect more social publishers like Twitter to open up access to real-time bidding."

For an analyst ratings summary and ratings history on Rocket Fuel click here. For more ratings news on Rocket Fuel click here.

Shares of Rocket Fuel closed at $39.84 yesterday.

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