Needham & Company comments on Entropic Communications (Nasdaq: ENTR) following lowered guidance and news that the company would explore strategic alternatives. The firm has Entropic at Buy with a price target of $4.50.
Analyst Rajvindra Gill offered the following commentary:
Takeout Candidate? ENTR has engaged Barclays to help evaluate strategic alternatives in the best interests of shareholders and the company. We believe there is a possibility the company is sold, with possible acquirers including NXPI, QCOM, INTC & MDTK. Entropic currently has 2,200 issued and pending patents worldwide, of which 1,700 are from the set-top box SoC Trident acquisition, and we believe this valuable IP for video and content distribution would be a key asset for a larger semiconductor company attempting to enter the home networking space. No timetable for the completion of the process has been set, and management does not intend to update investors until the Board either approves a specific action or the review is complete.
What Could a Takeout Price Be? We tracked 60 recent semi M&A transactions since 2009, with the median EV/S valuation being 2.0x, and the mean 2.4x. The average 1-day premium has been 31%, 5-day premium 30%, and the 30-day 34%. Given these metrics and ENTR's recent struggles, we believe a fair value for the acquisition could be ~$4.50 per share, or ~1.5x our new 2015 revenue estimate of $210MM. We believe the Murata acquisition of PSMI on 8/22 is a good comparison, with the 2.1x EV/S representing a 62.5% stock premium.
now that all this news has time to sink in. This "strategic alternatives" announcement is bs. It just gives them time to try to turn this sinking turd around. They will drag this story out as long as possible. Now if they announced this with a report that didn't have the word "PRE" in front of it, I would think differently. I think the price action speaks for itself.
4-5 bucks is my guess the most this company will see, especially since they preannounced again for the third and fourth qtr. BV is 3 bucks, so I don't see anyone paying more than 1.5 x book for this.
I know this stock is a loser, but I will take anything at this point. At least this is something, whether it is bs or not, it should put a temporary floor around 3.
more of nothing. we need inside buys,more large stakes being taken in the company, or a replacement of management to get things moving. These type of press releases do absolutely nothing for the stock.
just like the stock, this message board is pathetic. One person pumping a 2 dollar stock non-stop and that is about it. nothing seems to move this stock. not a press release or an 8% investment.
They cannot do a secondary until the lock up expires. Which is December 23rd. So don't expect to see a possible secondary until January.
stock is down on an up day and another useless press release. What does management do all day besides count their money that they take from the shareholders?