Five Reasons To Buy Audible, The Online Book Provider

Listen up! Citigroup’s Mark Mahaney this morning raised his rating on Audible (ADBL), the online provider of recorded books, to Buy from Hold. He notes that a recent 15% pull-back in the company’s shares provide an attractive entry point for the stock.

“The long-standing risk related to the uncertain long-term potential size of the downloadable spoke-word market remains, but we believe the potential reward in the shares right now more than offsets that,” he writes.

Mahaney offered a list of five reasons for the upgrade:

ADBL has reached “a sustainable profitability tipping point.”

Strategic initiatives in the U.K. and education markets are gaining traction.

Management changes increase execution performance.

Product improvement has had a significant impact.

Material share buybacks.

Audible reports earnings tomorrow. He sees revenue of $26.55 million and GAAP loss of 4 cents a share. “The key issue for the stock will be whether ADBL can generate its second consecutive quarter of positive EBITDA,” he says. “We believe it can, based on revenue growth and opex leverage.”

Mahaney today raised his price target on the stock to $13 from $9.50.

Audible today is up 78 cents at $10.36.

ADBL 1-yr chart:

Comments

[Long-ShortGuy]

Interesting:
<blockquote>
<b>Podcasters Unite to Figure Out a Role for Ads</b>

...Advertising, the other potential revenue source for producers and publishers, does not work when marketers have no way of tracking how many times their advertisements are being heard or swapping out old advertisements once they have run their course.

Industry executives say they have closed in on a solution in recent months, which means that consumers may have a much wider array of free audio (and video) content coming to them, if they can stand a little advertising to go along with it.

The effort is a multifront initiative, starting with improvements in technology. Companies have begun distributing media files that stay connected to publishers, giving them a way to track the number of times that advertisements have been heard or viewed, or replace old advertisements.

At the same time, about 15 companies, including Apple and NPR, announced last week the formation of a new industry group, the Association for Downloadable Media, that will help executives improve methods for creating, distributing and tracking advertisements in podcasts...
</blockquote>

Source:
www.nytimes.com/2007/0...