Royce Fund names five adtech stocks for long-term investors

The Royce Small-Cap Opportunity Fund has identified five adtech stocks worth investors’ attention. Like all funds managed by Royce, it focuses on small caps, particularly undervalued assets with additional growth drivers — such as new management or favorable market conditions.

Magnite, an online advertising platform, is well-positioned to benefit from the ongoing reallocation of ad budgets away from traditional media and into digital channels, says Kavitha Venkatraman, assistant portfolio manager at Royce Small-Cap Opportunity Fund. This trend is gaining momentum: although viewers spend half of their time on digital platforms, these channels currently account for only a third of TV ad spending. Over time, budgets will follow audience behavior, she predicts.

Criteo stands to gain from the growing demand for retail media, as it owns such a platform. Retail media provides advertisers with online tools to market to consumers at or near their point of purchase. As Venkatraman points out, this helps them to choose one product over another.

Two other companies, LiveRamp Holdings and Viant Technology, are expected to benefit from Google’s initiative to give users more control over cookies. For years, advertisers relied on cookies to collect consumer data and target ads. Now, with new restrictions in place, businesses need alternative solutions — and these two companies offer them.

LiveRamp Holdings operates a platform that gathers and delivers consumer data to advertisers. Viant Technology develops advertising software, including solutions that help advertisers to manage and purchase ad inventory across video, mobile, and search. Viant has gained traction among smaller advertisers turned away by the Trade Desk, the digital marketing industry leader. In 2024, the company reported 30% revenue growth to a record $289.3 million.

Venkatraman’s top five adtech opportunities also include Innovid. In February, the company announced its decision to go private after being acquired by competitor Mediaocean.

Royce Small-Cap Opportunity Fund bought shares in all five companies in 2023, Venkatraman writes. Initially, the fund was drawn to the cyclical downturn in the segment, but it later identified several structural growth drivers, including the shift in ad spending toward digital media. At the time, investors largely ignored these factors due to bearish market sentiment, she notes. However, the market dynamics are changing, making these stocks attractive for long-term capital.

Wall Street analysts are upbeat on three of the four publicly traded stocks, according to MarketWatch data

All seven analysts covering Viant Technology rate it a “buy.” The average target price of $23.86 per share is nearly double the current trading price.

Magnite has 11 “buy” ratings and one “hold.” The average price target of $20.63 per share implies upside of nearly 54% versus the last closing price.

Nine analysts rate Criteo a “buy,” while four have a “hold” recommendation. The average target price of $56.50 per share indicates potential for a 55% gain.

Analyst sentiment is split evenly on LiveRamp Holdings with four “buy” and four “hold’ ratings. The average target price of $37.88 per share suggests upside of almost 40% versus the last closing price.