What happened
Shares of IAC/InterActiveCorp (NASDAQ: IAC) rose 28.1% in May 2017, according to data from S&P Global Market Intelligence .
So what
Essentially all of this surge came in the first three days of May, following the announcement of IAC/InterActiveCorp's HomeAdvisor service joining forces with Angie's List (NASDAQ: ANGI) in a spin-out merger. On the other side of that negotiating table, Angie's List shares immediately went up 66% higher and doubled in value before the month was over.
Now what
Analysts were quick to embrace the merger, arguing that the move unlocks value in IAC/InterActiveCorp's conglomerate business model. Cowen analyst John Blackledge, for one, expects the deal to "result in massive value creation" as the merged business casts a large shadow on the vibrant home services market.
"The transaction will combine the best marketplace operator (HomeAdvisor) with the legacy brand leader (Angie's List)," Blackledge noted. In other words, the new ANGI Homeservices business should be more valuable than the sum of its parts as synergies develop between those two powerful branding effects.
IAC/InterActiveCorp is off to a strong start in 2017, gaining more than 60% in the first five months. Share prices are running red-hot at the moment, trading at 24 times forward earnings with a PEG ratio close to 3.0. As a reminder, a 1.0 PEG ratio would indicate shares trading close to their fair, growth-adjusted value and higher numbers make for a more expensive stock. I wouldn't be surprised to see IAC/InterActiveCorp shares taking a breather at this level.
10 stocks we like better than IAC/InterActiveCorp
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and IAC/InterActiveCorp wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 5, 2017
Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
