Three Catalysts Ahead For RealNetworks

Pacific Growth Equities analyst J. Derrick Wood Friday morning raised his rating on RealNetworks (RNWK) to Buy from Neutral, asserting that the stock looks cheap after a recent sell-off. Wood notes that the stock trades at 0.8x enterprise value/’07 sales, 9x ‘07 EBITDA and less than 2x cash. The stock is down 50% since late 2006.

Wood says he sees several potential upcoming catalysts for the stock:

Injection of $230 million for marketing over the next five years provided by Viacom (VIA), as a result of the company’s new alliance with MTV.

New alliance with Verizon (VZ) to promote Rhapsody in the telecom provider’s 1,500 retail stores; the deal also includes integrated billing for music-centric phones.

Availability of Rhapsody service with new TiVo (TIVO) boxes.

Concludes Wood:

With $3.20 in net cash/share, $2.90 in tangible book/share…a share buyback in place and our belief that fundamentals are intact and there are several potential catalysts on the horizon, we believe shares are oversold.

RNWK 1-yr chart: