Brean Capital Likes Risk/Reward Equation for SeaChange International

In a report published Thursday, Brean Capital analyst Todd Mitchell reiterated a Buy rating and $11.00 price target on

. In the report, Brean Capital noted, “We believe SeaChange's three business initiatives; 1) Adrenalin multi-screen back office, 2) Nucleus RDK home gateway platform, and 3) Infusion ad insertion software, are at the heart of service providers' TV Everywhere (TVE) upgrade and have the potential to revitalize the company's growth prospects and drive shareholder value. SeaChange is TiVo's antithesis. From a strong position in the back office, which will power TVE, SeaChange has sought a position in consumer premise equipment (CPE) software by championing the open-source technology and plug-and-play solutions of the largest MSO, developing the RDK for Comcast, and is implementing it for Liberty Global (LGI). Comcast paid SeaChange by the hour and left in the morning, but LGI is a license bearing agreement which will generate significant revenue at scale, and we believe could serve as a template for a whole host of international operators looking to follow LGI's lead. We recently spent time with SeaChange, its competitors, and its customers in Europe, at IBC in Amsterdam, and with some small operators in the U.S., at SCTE in Denver. We think the company is maintaining its leading share in back office and ad insertion technology and will be vindicated by its decision to dedicate resources to developing Nucleus with a successful LGI launch of its home gateway. We reiterate our Buy rating and $11 price target which is based on 15.0x fiscal 2018 FCF of $23 million, discounted to NPV at 11.7%.” SeaChange International closed on Wednesday at $7.13.