Fashion
Targeted digital ad firm Criteo now embeds cookies in nearly half of the 100 largest retail and travel websites in the U.S. and could be about to beef up its China presence.
That would help the French firm compete against top rival Google, according to an analyst.
“Criteo has cookies on 49% of the top 100 retail and travel sites (publisher and client) in the U.S. That share increases to 51% when you remove the sites that do not register any of the 23 cookies we track,” wrote Pacific Crest Securities analyst Evan Wilson in a research report Wednesday.
Cookies are small text files that allow websites to recognize users and their preferences when they return to a site.
Search leader Google has cookies on 76% of the top 100 sites, making it Criteo’s main competitor, but “the heavy overlap (82%) with Criteo reinforces our belief that (Google’s) cookies serve a different purpose,” Wilson wrote.
Criteo cookies are showing up for the first time on some sites outside China that are run by China e-commerce conglomerate Alibaba Holdings, says Pacific Crest. Criteo wouldn’t confirm that, Wilson said, but “we know it was previously pursuing Alibaba International. We found cookies in the U.S., France and Germany on Alibaba.com and on AliExpress. This could be a huge win, not only because of the non-China Alibaba revenue but because it increases the likelihood that Criteo could (eventually) win Alibaba’s China business.”
‘Great Firewall’ Challenge
France-based Criteo operates its China data center from Hong Kong, which, the company has said, causes “challenges,” since the speed of its programmatic buying technology between Hong Kong and mainland China “has been too slow and unreliable due to the Chinese government’s ‘Great Firewall,'” Wilson said, referring to the Chinese government’s heavy regulation of the Internet.
Pacific Crest raised its price target on Criteo stock to 65 from 55 and maintained a rating of overweight. Criteo stock was up 3.5% in afternoon trading on the stock market today, near 49.50. Criteo stock hit a 15-month high above 51 on June 5.
Pacific Crest also raised its revenue estimates for Criteo in 2016, citing in part “ongoing share gains in the U.S.”
Criteo tracks online ad performance and provides other ad services for clients. Besides Google, it competes against such companies as social network king Facebook and e-commerce leader Amazon.com.
Criteo ranks No. 18 in Wednesday’s midweek update of the IBD 50 and has an excellent IBD Composite Rating of 96. CR looks at earnings and sales growth, among other factors.
In May, the company reported Q1 EPS ex items of 30 cents, above analyst estimates. Sales rose 35% to $283.3 million. Criteo also raised its full-year guidance.
Criteo has hit some recent bumps, however. In June, Criteo stock sank 7% in heavy volume on news that the Apple Safari Web browser will include content-blocking extensions, allowing users to block pop-up ads, cookies, images and other content.
Analysts say that Apple’s plans to support third-party ad blockers could harm Criteo’s business model, especially on mobile devices.
