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Rocket Fuel Inc Blasts Away Q2 Estimates; Credit Suisse Maintains Outperform

Credit Suisse has maintained its Outperform rating and $7 price target on Rocket Fuel Inc (NASDAQ: FUEL) after the provider of programmatic marketing platform reported a top- and bottom-line beat as it continues to gain traction with its agency customers.

The company reported a loss of $0.15 versus the Street view of $0.23 loss. Revenue came in at $117.0 million versus consensus of $111.2 million.

In the near term, Credit Suisse expects the company to target its largest customers, cross-selling products and establish new agency relationships. In addition, Rocket Fuel could potentially leverage system integrators to serve small advertisers.

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For the third quarter, the company projects non-GAAP net revenue/Adj. EBITDA of $63 million–$66 million/$4 million–$7 million versus Credit Suisse' $64.8 million/$5 million.

The brokerage also raised its FY16 adj. EPS estimate to ($0.71) from ($0.79). Credit Suisse now expects revenue/Adj. EBITDA of $470.4 million/$17.6 million, respectively, up from earlier forecast of $458.4 million/$16.4 million.

"Our longer term investment thesis for Rocket Fuel lies on the belief that at its core, there is an underlying asset value in its technology and as it mends connections with agency holding companies and wins back ad budgets, that value will continue to be unlocked," analyst Stephen Ju said.

Shares of Rocket Fuel closed Tuesday's regular trading at $2.23 and was seen up 5.38 percent in Wednesday's pre-market session, trading at $2.35. Ju's price target of $7 represents a potential upside of 214 percent.

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