What happened
Shares of Perion Network (PERI -1.97%) were gaining in March as the company benefited from the broader recovery in tech stocks and anticipation for the new Bing, which helps Perion because of its strategic partnership with Microsoft.
According to data from S&P Global Market Intelligence, the stock gained 17%. As you can see from the chart below, those gains came primarily in the second half of the month as tech stocks rose broadly in response to falling interest rates.
PERI data by YCharts
So what
There was no company-specific news out on Perion, but the stock seems to be picking up momentum after a stellar performance last year and as it gains more recognition thanks to its partnership with Microsoft.
Perion was the only adtech stock on the market to gain last year as the company delivered strong growth on the top and bottom lines and continues to trade at a modest valuation.
In 2022, revenue rose 34% to $640.3 million and adjusted earnings per share jumped 57% to $2.47.
Excitement around the stock also seems to be building as the new Bing, which is powered by ChatGPT, attracted more attention. Perion is a preferred partner of Bing, repackaging ads and adding premium features to them in order to boost clicks and conversions. The current contract between the two companies runs through the end of 2024, but Perion has won accolades from Microsoft, indicating a high likelihood that the partnership will be renewed.
Last year, more than 40% of Perion’s revenue came from search, nearly all of that from Bing, and Microsoft’s CFO has said that every percentage point of market share that Bing gains would translate into nearly $2 billion of additional revenue for Microsoft, a potential windfall for Perion.
Additionally, the stock got a bullish analyst note as Needham raised its price target from $37 to $42, noting that its productivity trends were tops in the adtech industry in each quarter in 2022 and it expected that trend to continue in 2023. Needham also noted improving revenue per employee, a sign that the company’s gaining leverage on the bottom line.
Now what
Even after last month’s gains, the stock still looks cheap at a price-to-earnings ratio of 16.
Perion will report first-quarter earnings on May 3. Analysts are expecting revenue to increase 13% to $141.3 million, and for adjusted earnings per share to rise from $0.33 to $0.41. Keep an eye on the earnings report as strong numbers could spark another leg up for the stock.