IAC Interactive: Set for a Breakout?

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With annual revenues of $3 billion, IAC Interactive Corp. ( IACI ) has 50 Internet brands serving consumer audiences in 30 countries.

The company's mission is to harness the power of interactivity to make daily life more productive for people all over the world. Its brands include Ask.com, Citysearch.com, and excite.com.

The stock advanced from $42 in March to a peak near $52 in May. It then formed a double bottom base. It broke out in June, but then faded back. The stock is now regrouping and our firm sees it setting up for another breakout attempt.

The stock's accumulation and distribution line is lagging; it took a hit in late July when the stock fell back on heavy volume. However, the key now is that volume in recent days has contracted. That should indicate a dry-up of selling.

This year, analysts are forecasting an 82% jump in earnings from the year before. The current estimate on the Street is at $3.43 per share, up from $1.89 per share a year ago.

Going out to 2014, earnings should climb 17% to $4 per share from the anticipated $3.43 per share this year.

Net income for the upcoming third quarter is expected to leap 75% to $.82 per share from $.47 per share a year ago. Then the fourth quarter should show an acceleration in earnings growth with net income leaping 108% to $1.02 per share from $.49 per share the year before.

The past two quarters, IACI has surprised on the upside, topping the Street estimate by $.02 per share and $.21 per share, respectively.

Institutional sponsorship is excellent. The largest fund holder is 5-star rated John Hancock Disciplined Value Fund with a 1.8% stake. It was a recent buyer of 76,630 shares.

One of the largest fund buyers recently was 3-star rated Vanguard Explorer Fund, which bought 71,100 shares.

Our firm suggests accumulation of a partial stake in IAC Interactive now, with further buying to be done on a breakout over $52.40. We are targeting the stock for a run to $65 after a breakout. A protective stop can be placed near $48 after a breakout, giving it some room.

Editor's Note: This article was written by Leo Francisco, editor of Ticker Tape Digest , for MoneyShow .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: IACI

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