What happened

Shares of Magnite (NASDAQ:MGNI) were up 12.6% as of 1:49 p.m. EDT, and an analyst upgrade seemed to be the primary reason why, though news that SpotX, its recent acquisition, had signed a new customer may also have given the stock a boost.

So what

Truist analyst Matthew Thornton raised his rating on the stock from hold to buy, though he maintained his price target at $37, a reflection of the stock's having fallen sharply in the last few months. 

A woman looking at a digital television images on a glass wall.

Image source: Getty Images.

Thornton said that consensus estimates for the company are "very reasonable" right now, and his forecasts for revenue and EBITDA are slightly above the analysts' average. He also said the valuation looks a lot more attractive with the stock still down 50% from its February peak, and more than 12% below his target price.

Also on Monday, video data platform Iris.TV said it would partner with SpotX, the connected TV platform that Magnite acquired earlier this year. That's the latest step Magnite is taking to monetize its new business segment. The news comes after Magnite said last week it had signed e-commerce company Rakuten for new business in Europe and after it announced a leadership change at SpotX, showing it's reshaping the CTV platform.

Now what

Magnite stock has been volatile over the last year and a half. Ad tech stocks stumbled in the early months of the pandemic, but then came roaring back as digital advertising demand surged in the second half of 2020.

For 2021, analysts now expect a 70.5% increase in revenue to $377 million, reflecting in part the benefits from the SpotX acquisition, and earnings per share of $0.59. Given that forecast, Magnite stock doesn't look cheap, but Thornton's assessment that the stock is now reasonably priced seems accurate.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.