Internet Brands: A step in a different direction

Spinning an identity and driving traffic at one website is difficult enough for many companies, but Internet Brands (Nasdaq:INET) finds security in numbers.

The El Segundo, Calif., company squeezes value out of underutilized websites. Internet Brands has been public for less than a year, with its stock bouncing around November’s lowered IPO price of $8, a starting point for the 48 million shares that was one-third less than the company’s stated expectations of $12.

Two analysts surveyed by Thomson Reuters have Internet Brands as a “buy” or “strong buy,” and believe shares will rise; their median price target is $12.

Shares hit an intraday high of $9.44 on Feb. 7, but sank to $5.37 on July 30, ahead of Internet Brands’ reporting of second-quarter results. On Monday, Internet Brands closed at $6.91.

Internet Brands is a media company operating in the new age of consumer-driven content. While the business models of search engines such as Google (Nasdaq:GOOG) or Yahoo! (Nasdaq:YHOO) reach out on a horizontal plane, Internet Brands is a vertical Web proprietor, drilling down to specific consumer needs and interests.

Many of Internet Brands’ sites were acquired over the past few years and fall into five categories: automotive, travel and leisure, shopping and consumer electronics, home and employment. Its network includes autos.com and apartmentratings.com, along with others that deliver electronic coupons to savvy shoppers, or help freelancers and stay-at-home moms find work. Shopping and employment are recent additions, and management has indicated that it might enter another vertical next year.

Jefferies & Co. analyst Youssef Squali calls the Internet Brands strategy . . .

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