JPMorgan, Price Target $30:
Reiterate Overweight. DIVX is trading at 15.3 times FY08 PF EPS estimate of $0.91, a 32% discount to the mean of our coverage universe. With FY07 revenue growth tracking 45% y/y and pretax income growing 78%, DIVX looks significantly undervalued.We hosted investor meetings with DIVX management yesterday. The story, essentially unchanged since the IPO, remains encouraging – weexpect a slew of new DIVX-certified products (incl DIVX Connected) in2H07, including STB/DVRs. With the stock still under pressure, we aremissing something. In our view, this very strong growth story should now appeal to value investors too. Reiterate Overweight
Maxim Group, Price Target $25:
What should investors do with DIVX stock? We remain upbeatabout DIVX and continue to recommend that investors Buy thestock. While yesterday’s investor presentation didn’t provide much new information, we believe that the additional color about 1Qresults and 2Q guidance, a conciliatory tone, and further discussionabout the company’s growth drivers should help assuage someinvestor concerns. After 1Q07’s disappointing (on a number offronts) conference call, we believe that recent stock price weaknessis more a factor of management effectively communicating withinvestors than executing on its business plan.
Cannacord Adams, Price Target $26:
On the heels of the Q1 report, DivX shares have been making new lows. We believe the stock is oversold and that patience should be rewarded at current levels as new DivX-enabled devices ship this fall, fueling a highmargin IP Licensing model.We would be aggressive buyers at current levels.
DIVX trading up +0.85 (5.63%)
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