Perion Network Ltd: Technical Picture Supports Potential Multiyear Breakout

PERI Stock Is an Attractive Digital Advertising Stock

The shift to digital advertising has been accelerating, driven by more people moving to the online space and dumping hard-copy media.

Global digital advertising spending could climb as high as $683.1 billion by 2026. That estimate might even be on the conservative side. (Source: “Digital Advertising Report 2021,” Statista, last accessed April 14, 2022.)

To play this shift, investors might want to consider shares of Israel-based Perion Network Ltd (NASDAQ:PERI). Perion Network stock has tremendous upside.

The company’s software uses artificial intelligence and machine learning to help brands maximize their digital advertising campaigns. Perion Network Ltd has been delivering significant revenue growth, profits, and free cash flow.

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Yet, despite the company’s excellent fundamentals, PERI stock is down by 27% from its 52-week high of $33.09, which was set last November. At its current level, I view the stock as a nice contrarian opportunity for price appreciation.

Multiyear Rounding Bottom on Perion Network Stock Chart

Perion Network Ltd’s long-term stock chart shows PERI stock trading erratically over the last decade as the stock struggled to find a sustained direction. Essentially, Perion Network stock’s chart emulates a roller coaster ride. That’s great if you’re at an amusement park, but not so good if you’re holding a stock.

PERI stock fell as low as $2.18 in April 2018 before staging a multiyear rally to $33.09 in November 2021.

The following Perion Network Ltd stock chart displays a bullish rounding bottom pattern that started in 2014, bottomed in 2018, and then began to rally. This type of technical formation tends to result in higher moves.

Chart courtesy of StockCharts.com

After a brief downside move in January 2022, Perion Network stock has again found its bull legs and looks set to take a run at its November 2021 high. I doubt PERI stock has the legs to mount the attack at this time, and I believe there’s a lower entry point coming.

The Fibonacci retracement levels (the horizontal blue lines on the below chart) point to support at $21.77 and $18.27, followed by $14.78. If shares of Perion Network Ltd fall to these levels, it could be a great opportunity for savvy investors.

Chart courtesy of StockCharts.com

Analyst Take

My bullish thesis for Perion Network Ltd is supported by the strong tailwinds in the digital advertising market. Moreover, the company has been delivering solid fundamentals and it trades at a reasonable valuation.

Perion Network stock trades at a forward multiple of 15.8 times its consensus 2023 earnings-per-share (EPS) estimate of $1.54 per diluted share. The company trades at 1.5 times its consensus 2023 revenue estimate of $718.6 million. (Source: Perion Network Ltd. (PERI).” Yahoo! Finance, last accessed April 14, 2022.)