ValueClick Trades at Fair Value

ValueClick, Inc. (VCLK - Analyst Report) is a leader in the online advertising industry, which we believe is a growth business as traditional marketers shift advertising spending from traditional media to online outlets. However, VCLK is facing the fallout from an FTC [Federal Trade Commission] investigation in its lead generation business and one of its largest customers, eBay (EBAY - Analyst Report), has brought its advertising network inhouse.

Although VCLK raised full-year guidance, this was largely the result of a $5 million one-time gain in the first quarter, and lowers guidance for the remainder of the year by default. We therefore maintain a Hold rating on the shares of VCLK and set a $20.50 price target, a multiple of 25x our EPS estimate.

VCLK is currently trading at a P/E multiple of 25x our 2008 earnings per share estimate of $0.82, a discount to the industry median. Due to the fallout of the FTC investigation, the company s lead generation revenues were down for the third straight quarter. Moreover, the company faces intense competition from Google's (GOOG - Analyst Report) Performix and other direct advertisers and has lost its largest customer eBay. We believe this will hurt the company going forward.

Read the full analyst report on VCLK.

Read the full analyst report on EBAY.