IAC Interactive (IAC) shares back at a strong risk/reward spot after pulling off of 52-week highs recently and setting up well for a run higher and move out of a three-month range. A breakout back above $235 gets shares through their short-term moving averages and to recent highs near $260. Longer-term, the range has a measured move to $320. Options flow has been bullish with spreads buying the June $230/$260 call spread with the $200 puts sold last week while the June $250 calls bought over 7500X in early May. The $19.45B company trades 6.4X sales and 5.25X cash with limited debt and strong growth. IAC approved their spinoff of Vimeo last week which will begin trading independently at the end of May. The move leaves them with a lot of room to pursue new deals after last year’s buy of Care.com and their $1B stake in MGM which added to ANGI, Dotdash, and others. Short interest is 1.87%. Hedge fund ownership fell 3%. Luxor Capital with a 1.5M share position. Analysts have an average target for shares of $228.50 and a Street High $300. Barclays positive on 5/10 and sees the shares creeping higher on both the undervaluation of the core business and the possibility for a re-rating of Vimeo post the spin. Cowen positive in April and raising estimates following a survey of 200 Vimeo subscribers that show high interest in Enterprise subscriptions and rising video usage post-pandemic. The analyst now values Vimeo at $10.8B, up from $6B previously.

Trade to Consider: Long the IAC June $240 Calls for $8