SunTrust Initiations Move Wayfair, Travelport Worldwide And TubeMogul...But In Different Directions

• Travelport Worldwide Ltd (NYSE: TVPT) shares have lost 14 percent in the last three months, while shares of Wayfair Inc (NYSE: W) and TubeMogul Inc (NASDAQ: TUBE) have gained 38 percent and 29 percent, respectively.
• SunTrust Robinson Humphrey analysts initiated coverage of the three companies.
• The analysts referred to healthy growth at Wayfair and TubeMogul, and recommended waiting for signs of higher growth at Travelport.

Wayfair

Analyst Rodney A. Hull initiated coverage of Wayfair with a Neutral rating and a price target of $53. The company seems to be gaining share in the Home Goods ecommerce market. Over the past year, Wayfair has re-accelerated traffic, customers, orders and revenues.

“Key trends driving growth include increasing use of online for shopping and inspiration, mobile devices in store and at home, and increasing comfort in spending at higher price points,” the SunTrust report noted.

Hull added, however, that the shares have gained more than 30 percent in the past month, and the stock is currently trading in-line with comps. “We remain positive on the company's secular positioning and look forward to commentary around growth investments and cash flow in the future.”

Travelport

Analyst Rodney Hull initiated coverage of Travelport with a Neutral rating and a price target of $15. He believes that the company is well positioned with its core travel product as well as with new growth initiatives to leverage the underlying secular travel trend.

“Further, the company is improving its balance sheet, making concrete strides in lowering its leverage ratio,” Hull wrote. He added, however, that there need to be signs of faster growth and greater profitability as well as “potential competitive responses in growth markets.”

With the company already having announced its 2016 guidance, the upcoming catalysts include customer wins for growth products [Rich Content and eNett], joining of the new CFO in January and the next earnings update scheduled for February.

TubeMogul

Analyst Matthew Thornton initiated coverage of TubeMogul with a Buy rating and a price target of $16. While the company is a leader in a programmatic video, TV TAM is expected to grow from around $3b in 2015 to around $36b by 2019, according to IDC projections.

TubeMogul had a share of about 13 percent of the market in 2015 and its weighted-average 4-year TAM CAGR is around 66 percent, Thornton stated. He believes that TubeMogul is well positioned because of its “unique self-serve model and purpose-built brand-centric, video-centric platform.”

Most of the key drivers are new, Thornton said, enumerating them as:

1. The company entering PTV in late 4Q14
2. The company beginning to offer brand display inventory in 2Q15
3. Cross-screen planner and SelectAccess offerings being launched in 3Q15
4. Facebook Inc (NASDAQ: FB) [Rated: Buy] video inventory is in beta and is expected to go live in the coming quarters. There is also potential for new inventory from Twitter Inc (NYSE: TWTR) [Rated: Buy], Instagram, Snapchat, and/or multichannel video programming distributors.