How much does Rambler cost?

“We believe that the published market data exceeds the assumptions underlying our valuation of Rambler Media, as we expected the size of the Internet advertising market in 2006 to be $ 140 million, including $ 80 million in the banner advertising segment and $ 60 million in the contextual advertising segment. Thus, we may have underestimated the contextual advertising revenues from Rambler Media (in 2005, this segment accounted for 33% of revenue). The acquisition of Begun seems to be an even more significant factor for the cost of Rambler Media, since Begun is, first of all, an agent for the sale of contextual advertising. Over the past 10 days, Rambler Media stock quotes have shown strong momentum, rising 10%. Current quotes at $ 44.53 per share exceed our target price for the end of 2007 - $ 43.2 per share. However, it should be noted that our Rambler valuation does not take into account the potential integration of 100% of Begun due to the lack of information about both companies today (currently RMG owns 25% of Begun and consolidates them in its reporting using the equity method participation).

Our preliminary calculations imply that the acquisition of Begun should increase the cost of Rambler by at least 30% (see our October Rambler report). Thus, we still consider Rambler to be an attractive investment object and reiterate our recommendation to “buy” the company's shares. We believe that the published will support the shares of all media companies analyzed by us. Rambler and CTC Media remain our favorites in the sector, ”the Aton Broker analytical service reports.