Logo of Rovi Corporation. (Photo credit: Wikipedia)
April 30
ROVI : NASDAQ : US$29.26 Buy , Target US$48.00
Q1/12 preview;
Recommendation $48 target ahead of ROVI’s Q1/12 results.
We continue to believe that ROVI is well-positioned to benefit from current OTT trends and remain confident that numerous growth opportunities not reflected in ROVI’s current valuation exist in 2012 and beyond.
Highlights
The combination of additional segmented data and our industry checkssupports our thesis that ROVI remains a growth company in a growth market cycle.
Macro trends around connected-TV proliferation remain strong, providing ample opportunities for new and expanded agreements.
We believe the recent stock underperformance is related to post-debt raise fears of another acquisition. We adjust our estimates to reflect the additional $500M in debt.
ROVI is scheduled to report its Q1/12 result on May 3 after the market close.
Valuation
Our $48 target price reflects a 16x forward P/E multiple on our unchanged 2013 pro forma EPS estimate of $3.00. We believe that ROVI’s core businesses remain strong. BUY
