Angi, Inc (NASDAQ:ANGI): Why to buy this digital marketplace stock?

Angi, Inc. (NASDAQ: ANGI) engages in the provision of a digital marketplace for home services. It operates through the following segments: Ads and Leads, Services, Roofing, and International.

The Ads and Leads segment provides service professionals with the capability to engage with potential customers, including quote and invoicing services, and provides consumers with tools and resources to help them find local, pre-screened, and customer-rated service professionals nationwide for home repair, maintenance, and improvement projects.

The Services segment includes the provision of services through the Angi platform. Angi fulfills the request through the use of independently established home service providers engaged in a trade, occupation, and/or business that customarily provides such services. The Roofing segment includes roof replacement and repair services through its wholly-owned subsidiary, Angi Roofing, LLC. The international segment consists of Europe and Canada.

Highlights and News Updates

• On May 16^th, 2023,  Angi released the results of a nationwide survey that shows how the friendly lawn competition among neighbours is heating up this summer.

• On May 4^th, 2023, Angi teamed up with SkillsUSA to sponsor National Signing Day and celebrate students pursuing trade careers.

• On March 29^th, 2023,  Angi announced the results of a new survey of 1,000 U.S. homeowners, which highlights the differences in how women and men of different ages and generations approach homeownership in a post-pandemic era.

• On December 7^th, 2023, Angi released the 2022 State of Home Spending report, Despite inflation and recession fears, U.S. homeowners continued to invest in their homes in 2022.

• On October 26^th, 2023, Angi and Walmart partnered to make booking professional Christmas light installation easier than ever.

Key Data

First Quarter 2023 Highlights

• Revenue stood at US $392.41 Mn down by 10% compared to last year’s first quarter.

• Net loss stood at US $15.32 Mn, the loss narrowed by 54% compared to last year’s first quarter.

• Gross profit stood at US $350.4 Mn up by 4% compared to last year’s first quarter.

• Diluted loss per share stood at US (0.03) compared to US (0.07), the loss narrowed by 54%.

• 14% revenue growth was seen in the services segment, and 5% revenue growth was seen in the roofing segment.

Financials

The revenue of the company has grown at a CAGR of 20.77%. In FY2022 revenue of the company grew 12% Y-o-Y due to 7% growth from Ads and Leads, 10% growth from Services, and 5% growth from the roofing.

However, the profit of the company is not high unlike the revenue, the company has been  in loss since FY2020

The company booked loss due to US $26 Mn goodwill impairment at the roofing segment, US $19.6 Mn depreciation primarily due to the impairment of certain internally developed software that was no longer of use, US $5.6 Mn stock-based compensation, and US $13 Mn of legal related expenses and restructuring charges. The selling and marketing expenses were also high because of which company booked loss in FY2020, FY2021, and FY2022. Selling and marketing expenses were US $913 Mn in FY2022, US $883.64 Mn in FY2021, and US $762.59 Mn in FY2020.

The debt of the company is concerning  as the company is not able to generate net profit and the company has no retained earnings. Although, the company has assets worth US $1.91 Bn.

The quarterly revenue of the company is in a downtrend. The revenue of the company fell in Q1’23 due to decrease in the Ads and Leads segment by 13%.

Currently, the EPS of the company is US $-0.26 compared to US $-0.14 the previous year.

Forecast

Currently, the company is trading at US $3.24 with a 1-year projected target of around US $5.90 and a low estimation of US $2.78; the average price target is US $4.04.

Technical Analysis

• The stock has corrected more than 45% since 2022, and now it has made a bullish W-pattern.

• Currently, RSI (69) indicator is above 50 which shows it is a good time to invest in this stock.

• The stock has the potential to bounce back up to 80% from the current market price. Analysts are bullish on this stock.

• The stock is also above the 50-day EMA.

Indicators Summary – Buy

• The price action analysis of the stock is indicating a positive uptrend in the stock. Market sentiments are bullish.

• MACD (0.28) indicator is giving a bullish signal.

• VWAP (2.92) indicator is bullish on the stock.

Risk factors

• Company’s financials are weak as the company is unable to book profits.

• Debt of the company is concerning.

• The high selling and marketing expenses are very high eating up most of the revenue.

Stock Recommendation

Angi, Inc. operates in the advertisement industry with a market capitalisation of US $1.641 Bn, Angi, Inc. is trading in its supply zone and analysts think within one year, the stock of the company can touch $5.90. The financials of the company are not strong enough and it is not recommended for long-term investment but investors can invest in the stock for short-term gains.

MarketFacts gives a “Speculative Buy” rating on the stock at the closing price of US $3.20 as of May 26^th, 2023.

CMP (USD)  (May 26, 2023)	US $ 3.20
Target Price	US $ 4.75
Recommendation	Speculative Buy