Merrill Lynch’s Tal Liani picked up coverage with a Neutral rating:
We believe the switched video market is BigBand’s most exciting segment and size the opportunity at $5-$15 per home passed. In our view, BigBand has an 18 month technological lead on Cisco (CSCO) and Motorola (MOT), with wins at Cablevision (CVC), Time Warner (TWC) and Cox. We also believe BigBand is strongly positioned to win significant parts of forthcoming tenders at Verizon (VZ), Cox, Time Warner, Videotron and Rogers. Comcast (CMCSA) and Charter (CHTR) may defer their vendor decisions until late 2007 or 2008.
All that said, Liani concludes that “the current valuation already reflects most of the near term upside,” and finds a fair value of about $20 a share.
BigBand went public last month at $13 a share, in a deal co-managed by Merrill and Morgan Stanley; also involved were Jefferies & Co., Cowen and ThinkEquity.
As it happens, Jefferies & Co.’s George Notter started coverage of the stock yesterday with a Buy rating. He set a $22 price target on the stock. Notter says switched broadcasting technology “is the lowest cost, most efficient way of addressing cable operators’ bandwidth issues.”
Meanwhile, Cowen’s John Anthony picked up coverage of the stock yesterday, as well, starting the stock with an Outperform rating. He writes that BigBand is “uniquely positioned to benefit from rapidly emerging services such as video on demand, digital simulcast, high-definition content delivery and packet video.” Anthony asserts that the company has “a distinct and significant competitive advantage.”
That may very well be true, but when one of your lead underwriters starts coverage of the stock with a Neutral rating, the Street is going to be disappointed. Ergo, BigBand yesterday was down 42 cents at $18.20.
