Liveramp Holdings Inc (NYSE:RAMP) On A Mission To Maximise Output

Formerly known as Acxiom Corporation, Liveramp Holdings Inc (NYSE:RAMP) is one entity sharply focusing on maximising output. Interestingly, the company’s stock is performing exceptionally since the rebranding.

Divestiture of the advertising arm

Before rebranding, Acxiom Corporation had operations in the line of advertising via Acxiom Marketing Solutions (AMS). However, the company’s management acquired shareholder approval to divest the AMS segment.

In particular, Acxiom Corporation anticipates to earn approximately $2.3 billion from the deal. However, reports indicate that the deal is still open and could close in Q3 FY19. The sale will complete once it satisfies all regulatory requirements.

According to a recent regulatory disclosure in Acxiom Corporation’s FORM 8-K, The Interpublic Group of Companies, Inc. purchased AMS. The purchase agreement allows Liveramp more cash on hand for investment. Further, it frees up some manpower that will now focus on growing the firm’s balance sheet.

Liveramp Holdings Inc stock price            

Liveramp is largely productive, especially after spinning off the advertising arm. However, it is difficult to cultivate the company’s future cash flow on which future value can be computed. This is due to the recent rebranding and restructuring of the business.

Further, it seems the rebranding is still yet to capture investors in the market. Particularly, the Relative Strength Index (RSI) falls far from 100. Usually, values close to 100 indicate a high momentum for the stock price. However, values far from the 100 figure indicate subdued price action for the stock.

Given that the RSI reading for Liveramp is 44.91, it is clear that the stock lacks momentum. However, this could be due to the recent rebranding. Further, the divestiture of the Acxiom Marketing Solutions could be another reason for the little momentum.

Nonetheless, the 200-day moving average shows positive performance. Based on the last 200 days of trading, Liveramp’s share price finds support at 37.57. This indicates that were demand to fall from the current stock price of 45.27, the price cannot fall beyond 37.57.

However, the MA (50) and MA (7) for the same stock indicate some turbulence in the performance. Particularly, both the MA (7) and the MA (50) establish a price resistance at 46.44. As such, the short-term performance of the firm is shaky.

Financial health

Like earlier mentioned, Liveramp just sold Acxiom Marketing Solutions. As a result, the firm has a lot of cash on its hands for utilisation. Interestingly, the company anticipates a sum of $1.7 billion from the divestiture. This is an amount adjusted for taxes and other fees involved in the transaction.

Interestingly, the firm has various options available on how to utilise the capital windfall. For instance, it could pay off all of the $230 million existing debt. This way, the company could immediately go debt-free.

On the other hand, the company was initially engaged in share repurchase program before rebranding. The share repurchase program was to give the new company more control over its business. Therefore, it is possible for the firm to embark on the share repurchase program with a new strength.

Other available options include strategic acquisition of other performing companies to support its income. Ultimately, it is clear that the short-term and the near long-term of the company’s financial health is strong.

Future performance

As a result of the strong financial position, the company will expectedly post better performance in the coming days. Particularly, the earnings growth of the company will expectedly exceed 3% which is a low risk level.

Further, the company expects its revenue growth to exceed the market average for the IT market. However, the same is not true about the growth of the earnings which are below the market average.

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