TiVo Rallies on Goldman Initiation
Shares of TiVo (NASDAQ: TIVO) rallied on Friday, up as much as five percent. Later in the morning, shares corrected somewhat alongside the broader market, but remained up on the session.
Analysts at Goldman Sachs issued a research report on the company, giving it a Buy rating and a $15 price target.
Goldman notes, “We view TiVo as a leading vendor well positioned to target consumers who desire a premium viewing experience in the digital living room and on mobile devices...we see a reasonable foundation for management's adjusted EBITDA profitability goal for FY14 and beyond.”
TiVo has been a great performer in 2012, rallying over 40 percent year-to-date. Still, shares have been notably volatile, hitting a low in the summer near $7.80 before bouncing back to move up strongly higher.
With the rise of alternative forms of entertainment and methods of viewing content, TiVo could be an attractive stock. Although a small player, TiVo's DVR service blends traditional cable programming with Internet-based alternatives like Netflix (NASDAQ: NFLX). It also makes it easy for customers to use their mobile devices as a part of their entertainment complex.
Still, the company faces a lot of competition.
Cable and satellite providers themselves have made inroads on DVR technology, a sector TiVo used to, for the most part, have a monopoly on. DISH Network (NASDAQ: DISH) has even used its DVR -- “The Hopper” -- as a cornerstone in its sales strategy to attract new customers.
Bigger tech companies have moved into the space as well.
Since releasing the Xbox 360 in 2005, Microsoft (NASDAQ: MSFT) has moved to transform the device from a simple video game console into a fully featured entertainment device. Likewise, Nintendo's (OTC: NTDOY) new WiiU features enhanced entertainment capabilities focusing on using the WiiU's tablet controller as an interactive TV remote.
There's also the issue of smart TVs.
Apple (NASDAQ: AAPL) is widely rumored to be working on a smart TV. Any TV offering from Apple would likely include many of the features that drive TiVo's subscribers to its service.
Still, TiVo is one of those companies that has long been rumored as a takeover target. Although there is nothing substantial to back up these claims, TiVo's DVR patent portfolio could prove to be attractive in the coming years.
With tech companies now shifting their focus to the living room, the patent battles that have come to dominate the mobile world in recent years could soon resurface in the TV realm.
Shares of TiVo traded at $12.70 on Friday.
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