DoubleVerify is the IBD Stock of the Day as the specialist in digital advertising verification forges an entry point from a cup-with-handle base. Bank of America and BMO Capital Markets recently initiated coverage of DV stock with buy and outperform ratings, respectively.
New York City-based DoubleVerify provides digital media measurement and data analytics for internet TV and social media platforms.
On the stock market today, DoubleVerify stock rose 5.2% to close at 38.38. DV stock has gained 53% over the past year. But shares have pulled back from a 52-week high of 42.51 set on July 31, so its relative strength line is naturally well off its high.
The digital ad stock has built an entry point of 38 from a cup-with-handle base. The Jan. 11 high of 37.14 provides a more aggressive entry within the handle.
Fourth quarter earnings for DoubleVerify are due early February. Investors may want to be cautious ahead of the earnings report. One strategy around earnings would use call options.
DoubleVerify recently completed a secondary offering, with Providence VII U.S. Holdings and Providence Butternut Co-Investment selling shares.
DV Stock: Meta Platforms A Big Customer
The company announced Wednesday that it was now live with brand safety and suitability measurement inside Meta Platform's Facebook and Instagram Feed and Reels.
"A partnership with Meta was first announced in March 2022, which was the first time Meta indicated it was opening its Feed to third-party brand safety verification," said William Blair analyst Arjun Bhatia in a report. "This announcement is a positive sign and indicates that broader adoption of DV inside Meta is likely in 2024 and beyond. Meta is DV's largest social platform, at about $40 million in revenue (or about 7% of total annual revenue)."
DoubleVerify's September quarter revenue rose 28% to $144 million. Adjusted profit climbed 33% to 8 cents.
The Moody's Of Digital Advertising?
DoubleVerify reduces ad fraud by verifying advertising views and engagement by consumers online. It also promises to ensure placement of ads in safe and suitable environments for brands.
"We think of DoubleVerify as the Moody's of digital advertising," said Bank of America analyst Omar Dessouky in a report. "In the same way ratings agencies grade corporate debt, DV analyzes the quality of online media — measuring the rate of unviewable, fraudulent, and brand-objectionable content bought during a digital campaign, thereby helping brands understand the true effectiveness of their ad budgets, and by extension, the reliability of their numerous intermediaries."
Dessouky added: "Even powerful walled gardens such as META, Alphabet, Netflix, TikTok and (Microsoft's) LinkedIn have acquiesced to advertiser demands for independent verification, presenting DV an opportunity to ride the coattails of digital media innovation for years to come."
DoubleVerify Launched IPO In 2021
Founded in 2017, DoubleVerify competes with companies like Comscore and Integral Ad Science in the measurement segment.
DoubleVerify launched an initial public offering in April 2021 with shares priced at 27.
DoubleVerify has integrated its software across the digital advertising ecosystem, including programmatic platforms, social media channels and digital publishers.
BMO Capital Markets Brian Pitz in a report said DoubleVerify's products help online advertisers avoid fraud and waste while ensuring ads are displayed in suitable, brand-safe environments.
"Digital ad fraud is set to double to $172 billion by 2028. This fraud and waste comes in many forms, including bots, click fraud, made-for-advertising websites, disinformation, unsuitable or adult content, user-generated short-form video, bait-and-switch ad bidding techniques, and much more," Pitz said.
DV Stock: Technical Ratings
He added: "The increasingly NSFW (not safe for work viewing) nature of user-generated short-form video content on platforms such as TikTok and Instagram suggests a widespread need for DV's suitability and brand safety tools as advertisers flock to those platforms."
DV stock's Relative Strength Rating stands at 88 out of a best-possible 99, according to IBD Stock Checkup.
DoubleVerify has an Accumulation/Distribution Rating of B. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling.
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