Brean Capital Reiterates Buy Rating, $22 PT on Rovi Corporation on Core IPG Licensing Business
In a report published Monday, Brean Capital reiterated its Buy rating and $22.00 price target on Rovi Corporation (NASDAQ: ROVI [FREE Stock Trend Analysis]).
Brean Capital noted, “We would be more aggressive with evidence of further de-risking of the story. We believe that Rovi's core IPG licensing business has the ability to generate strong cash flows, and that management's back to the basic strategy will lead to improved earnings power that prove its current valuation to be overly discounted. However, investors are facing several events in the near future which we believe are holding share prices down including the sale of RES, key renewals and a reinvigoration of DivX, and CE IPG licensing disputes with LG and Phillips. If Rovi can successfully resolve each of these issues in 2013, we believe it will set a base for strong revenue and EPS growth through 2016 on the resolution of OTT licensing disputes and the renewal of service provider IPG licensing agreements with several large MSO. As a result, we reiterate our Buy rating and $22 price target on shares of ROVI, albeit with a healthy degree of near-term caution.”