As the leader in the audience measurement space, Nielsen is being helped now by the financial issues that have distracted comScore, according to Brian Wieser of Pivotal Research. But Nielsen will also benefit as comScore recovers and makes the case for client investment in measurement services.
Based on Nielsen’s financial reports, Wieser, in a note Monday, raised his target price for Nielsen stock to $39 a share from $38 a share. It closed at $45.16 Friday.
And Wieser said that developments at rival comScore will have a positive effect on Nielsen.
comScore—which has been delisted because of accounting problems that prevent it from releasing normal earnings statements—provided an update to investors on Friday and said that its revenues were flat during 2016. It also said it was disappointed by the performance of its digital audience measurement product validated Campaign Essentials (vCE).
“We also thought that spending on the investigation, re-audit and legal costs of $39mm during all of 2016 was noteworthy for what it indicated about the diversion of resources the company has had to deal with over the past year,” Wieser noted.
“It seems reasonable to assume that comScore’s internal distractions have restrained the degree to which it might announce and deploy competitive initiatives that might be perceived as hurting Nielsen, and further reasonable to assume that Nielsen’s DAR has taken some market share from comScore’s vCE at least in part because of the same issues,” Wieser said.
The analysts added that at a time when Nielsen is having some problems with its own new products, notably Total Content Ratings, comScore’s problems mean less pressure on Nielsen to move quickly.
But Wieser adds that healthy competition for Nielsen helps fuel demand for third-party measurement services and that primarily benefits Nielsen as the leader.
“The opportunity for third party measurement services is not likely to get smaller any time soon, as illustrated by recent mis-measurement issues by Facebook and Twitter as well as the growing demands from marketers to include third party measurement in their increasingly fragmented media buys,” he said. “As a clear #2 player in the industry, the louder that comScore’s voice is in reinforcing the importance of its services and products, the better off that the company with the largest presence – Nielsen – will be as well.”