TWTR, AMC, BCOR, IACI: Earnings previews ...

Twitter (TWTR)

TWTR will report Q2 results today after the close.  FB's strong Q2 numbers may have indicated that TWTR also had a good Q2.  While the World Cup, wars, and other geopolitical factors likely have driven up TWTR's Q2 MAUs more than expected, we think the ad revenues per 1000 timeline views may disappoint.  All of this may be offset partially by better than expected growth in data licensing revenues, given the continuing frenzy over 'Big Data' in the technology and ad spaces.  Our 5-year DCF model spits out a $15.8bil valuation of TWTR, lower than the $22.5bil valuation the market is giving it.   


AMC Entertainment Holdings (AMC) 

AMC will report Q2 results on Wednesday (7/30) after the close.  Similar to Regal (RGC), we expect some weakness in the attendance numbers due to the World Cup and not enough blockbusters.  However, in terms of average ticket prices and average spent on concessions, we think those numbers will be encouraging.  We remain 'neutral' on AMC continue to value it at $26/sh based on a 5-year DCF and its share of NCMI.  We initially discussed AMC and some other movie theatres on 3/21.


Blucora (BCOR) 

GOOG's Q2 TAC, related to its AdSense, grew only 4% Y/Y, compared with 10% in Q2 '13; certainly not encouraging for BCOR.  Such deceleration in GOOG TAC (positive for GOOG as its ad revenues still grew 19%, but not for its partners) has been evident also in annual numbers as TAC grew 5.7% and 20.5% in FY '13 and FY '12, respectively.  Historically, we estimate that AdSense has been responsible for 80%+ of BCOR's search revenues.  Combined with the fact that the latest arrangement between GOOG and BCOR do not include ads on mobile platforms, this is not every good news for BCOR's search segment.  We have touched on this risk faced by BCOR before.

We expect only high single-digit search segment revenue growth for BCOR this year.  We think the Company can accelerate growth in its owned and operated (O&O) search revenues, likely in the teens.  However, O&O revenues represent only 20% - 25% of total search revenues.  We expect total search revenues to grow approx. 10% this year compared to 24% in FY '13. 

BCOR stock has declined 36% since it hit its 52-week high of $30.12 on 11/15/13.  We value it at approx. $20.00, based on sum-of-parts: FY '14 EBITDA multiples of 5, 8, and 7.5 for its search, TaxAct, and e-commerce segments plus net cash.  The Company is trying to further diversify its business and lower its dependency on the search business.  As a reminder, we recommended BCOR on 1/29/13 at $15.13 and 'downgraded' on 11/5/13 at $24.24.  BCOR has not yet announced the date of its Q2 earnings report. 


IAC/InterActiveCorp (IACI) 

The same 'TAC logic' we believe is applicable to IACI when it comes to its search & applications segment.  Although, IACI's acquisition of ValueClick's O&O websites in Dec. '13 may make those figures look a bit better.  We expect approx. 11% growth in search & applications revenues for FY '14.  What has held IACI stock in the mid to high $60s is anticipation of an IPO of the Match Group (online dating) business.  It appears the market considers Match Group's Tinder (which we discussed early on in Nov. ’13) attractive, although the question of monetization still needs to be answered.  Earlier this month, IACI added to its 'dating portfolio' by acquiring some of HowAboutWe, another online dating company.  Zoosk, another online dating service provider, filed its S-1 on 4/16/14.  Of course, a successful Zoosk IPO could shoot IACI stock much higher.  But we still have a 12-month valuation of $60 for IACI, based on 7.5x FY '14 EBITDA.  We recommended IACI on 1/29/13 at $40.65 and 'downgraded' it on 11/4/13 when it closed at $55.68.  IACI is scheduled to report its Q2 numbers tomorrow (7/30) before the open.