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TiVo Shares Up More Than 2%: Can it Sustain the Momentum?

TiVo Corporation’s TIVO shares have added more than 2% in yesterday’s trading session, outperforming the market.

In the past three months, its shares have advanced 3.5%, outperforming the industry’s gain of 1.2%.

Before we discuss how investors and analysts have reacted of late, let's take a quick look at the most recent fundamentals and trends in order to get a better understanding of the important drivers.

Growth Drivers

Digital home entertainment services and solutions provider reported strong results for second-quarter 2017, wherein both the top and bottom lines came ahead of expectations. It should be noted that TiVo was formerly known as Rovi Corporation. Upon successfully completing the acquisition of TiVo Inc. in early September 2016, Rovi adopted the iconic TiVo brand name.

The company posted adjusted earnings of 30 cents per share, which fared better than the Zacks Consensus Estimate of 10 cents. The year-over-year improvement was primarily owing to robust top-line growth resulting from the acquisition of TiVo.

TiVo’s revenues surged 66.5% year over year to $208.6 million, mainly backed by the acquisition of TiVo Inc.’s business, new licensing agreements and launch of innovative products. Notably, increasing demand for Pay-TVs prompted various Pay-TV service providers, TV manufacturers, mobile device makers and OTT companies to make licensing deals with TiVo.

Prior to the acquisition, Rovi provided a set of solutions that allowed businesses to protect, enable and distribute digital goods to consumers, helping them discover and manage digital media across multiple channels. Meanwhile, TiVo Inc. pioneered a brand new category of products by developing the first commercially available digital video recorder. However, over the years, the company expanded its capabilities beyond hardware sales and patent licensing to online subscription services.

The merger has brought together two leading players in the media entertainment industry, with complementary products and services, as well as a number of patented technologies. The new TiVo Corporation is the global leader in entertainment technology and audience insights. The company has a diverse product portfolio that ranges from interactive program guide to DVR. The combined company has emerged as the world’s leading media and entertainment provider to deliver the ultimate entertainment experience.

Apart from this, the combined company has over 6,000 issued and pending patents, which offers it a competitive advantage over other media and tech giants.

Conclusion

The stock carries a Zacks Rank #3 (Hold). Additionally, the stock has long-term earnings per share growth rate of 10%. Notably, the company has delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 66.3%.

In our opinion, the stock deserves a place in investor’s portfolio and we are expecting an impressive return from the stock in the next few months.

A few better-ranked stocks worth considering are Applied Materials, Inc. AMAT, NVIDIA Corporation NVDA and Micron Technology, Inc. MU, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS growth rate for Applied Materials, NVIDIA and Micron is 17.1%, 10.3% and 10%, respectively.

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TiVo Corporation (TIVO) : Free Stock Analysis Report
 
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