SEAC Is A Buy, According To Brean

In a report published Wednesday, Brean Capital maintained a Buy rating on
SeaChange InternationalSEAC
, with a price target of $11. SeaChange's stock is not for "the faint of heart," as the company has disappointing investors several times with delays and downward revisions in guidance, and its FY15 figures "were no exception," the analysts said. Although the company reported its F4Q15 results in-line with expectations, its guidance for FY16 was highly disappointing, implying no growth in revenue for the year. In the report Brean Capital noted, "We think that F2016 guidance reflects a conservative stance on LGI's deployment of its Nucleus home gateway solution, and the potential for new wins, and we believe the introduction of new SaaS products could point to upside in 2H16, or at least stronger momentum going into F17." SeaChange announced the conclusion of a Rave trial with a telco. It also has ongoing trials with two other customers, one of which could be a major content company while the other may be an Axiom customer in the US. SeaChange purchased Timeline Labs in F4Q15, due to which it now has customer relationships with Fox TV,
Sinclair Broadcast Group IncSBGI
,
Media General IncMEG
and Tribune Broadcast. "Timeline Labs does not command a high ASP, but the product is doubling as a lead generator for Rave at the Network level," the analysts added. "Moreover, we continue to believe that the company is well positioned for the transition to TV Everywhere (TVE) and the emergence of new B-to-C OTT distribution models, the latter of which should smooth out its business model with a more predictable revenue stream. Together, we continue to believe that these factors make the company a highly strategic asset to a potential acquirer," the Brean Capital report mentioned.

Posted In: Brean CapitalAnalyst ColorReiterationAnalyst Ratings

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