Citigroup Upgrades Bankrate to Buy

From Analyst Mark Mahaney:
Upgrading RATE To Buy With $40 PT — In this environment, we seek to be
highly selective. We seek to be Long only stocks with very strong market share
positions, some option value in terms of new revenue streams, tried & tested
management teams, pristine balance sheets, compelling valuations, and
potentially some counter-cyclical elements. We believe RATE fills this bill.
RATE is our only sub-$2B market cap Buy.

Four specific Upgrade Reasons:

1) A Beneficiary Of Financial Market Volatility, Esp. Mortgage Rate Declines —
Bankrate.com is a broad consumer finance Website that is advertising revenue
driven. More page views means more advertising revenue. And what drives
those page views are major financial news developments, especially rate
volatility. The recent drop in 30-year fixed-rate mortgages below 6% and the
recent surge in national refi activity should benefit RATE.

2) Pending Website Relaunch Could Be A Catalyst — The pending relaunch of
the Bankrate Website and the switch from static to dynamic content &
advertising targeting should lead to improved pageview monetization.

3) Risk-Reward Outlook Appears Compelling —Post a 43% YTD share price
decline, RATE trades at 6.8X ’09 EV/EBITDA. We view this as attractive vs. a
historical forward EV/EBITDA multiple range ranged of 5.4X to 20X and vs. our
estimated 44% ’08 EBITDA growth and 26% ’09 EBITDA growth. Also, 32% of
RATE’s float is held Short.

4) Revenue Diversification & Margin Expansion Contribute To Core Long Thesis
— Non-Mortgage Channel revenue has grown from 34% of total revenue in
2005 to over 75% today, demonstrating a broadening consumer value
proposition as well as key revenue diversification. Scale, effective acquisition
integration, and organic traffic growth should all contribute to EBITDA margin
expansion from 35% today to 40%+ long-term.

$40 Price Target Implies 46% ETR — Our $40 PT is based on 10X our ’09
EBITDA of $75MM. Note that our estimates and PT are unchanged.