NEW YORK—An RBC Capital Markets analyst upgraded ValueClick Inc. to "Outperform" from "Sector Perform" Monday, citing an expected swift end to a probe by the Federal Trade Commission and stable fundamentals, among other factors.
The FTC is investigating the online advertising company's practices, including its use of ads that promise "free" gifts to consumers for participating in an activity.
"We believe the FTC scrutiny of ValueClick ... focuses on misuse of the word 'free' and on increasing the prominence of disclosures explaining actions required to receive a free gift," analyst Jordan Rohan said in a client note.
The investigation, which the company's chief executive recently said could finish in the first quarter, may result in a small fine, "but we believe the fine should be somewhat minimal when compared with the company's overall resources," Rohan said. He also raised his price target to $24 from $20.
The Westlake Village, Calif., company has made gains in its comparison shopping business, especially due to recent contracts with Apple Inc. and Dell Inc. Also, MeziMedia, a recently acquired comparison shopping company, should help fuel growth, he said.
Such factors led Rohan to say his forecast for 12 percent revenue growth in the fourth quarter of 2007 may be "conservative."
Shares rose 83 cents, or 4.2 percent, to $20.60 in premarket trading Monday.
