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: