Why This Analyst Sees Care.com Fetching Up To $16/Share In Potential Sale

Care.com Inc (NYSE: CRCM), an online platform to help people find and manage family care, is reportedly undertaking a strategic review and could sell itself in the $14 to $16 per share range, according to BTIG.

The Analyst

BTIG analyst Marvin Fong maintains a Buy rating on Care's stock with a $13 price target.

The Thesis

Care.com appears to be "ripe for a possible sale" of itself given multiple vacant positions in senior management along with frustrated shareholders and pressure from activist investor Engine Capital, Fong wrote in a note.

On the other hand, the company does have a leading platform within an attractive market with a short list of potential buyers, including IAC/InterActiveCorp (NASDAQ: IAC), Internet Brands, or a private equity group.

Fong said a potential buyer would appreciate Care's more enhanced background checks and management's strategy to fight back against recent negative press. The company also boasts a "sound" balance sheet and positive free cash flow.

At this point a sale is "more likely than not" to take place and a price tag of $14 to $16 implies a multiple of 22 to 26 times 2020 estimated Adjusted EBITDA.

Price Action

Shares of Care.com were trading higher by 8.4% Monday at $12.13.