Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Pixel Media - its looking encouraging for the minnow

In the last five weeks, Google, Yahoo, AOL, WPP and Microsoft have all made acquisitions of substantial online media companies at stratospheric prices.

The house broker has reminded us that Pixel Media (AIM:PIXL), a new issue in which we participated last year and featured in my blog before, was itself an MBO of DoubleClick’s loss making Hong Kong operations about five years ago.

Google has now bought Double Click for $3.1bn, equivalent to 30x 2007 EBITDA or just over 10x historic sales. The broker has reminded us that In terms of Pixel these valuation metrics would equate to a value of 62p/share and 112p/share respectively.

Although we are hardly comparing like with like in terms of size, footprint and revenue the broker’s price target of 59p compares favourably with the lower of these valuations and also with the minimum of 61p for the deferred equity element of the earn out for the acquisition of Easy Growth (Chinese online affiliate marketing through Share Freedom Wireless).

The broker expects the market soon to latch on to the investment opportunities in marketing and advertising for the ever nearer 2008 Olympics in Beijing. But what about buisiness post Beijing games!


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