After meeting with TiVo's (NASDAQ:TIVO) CFO Thursday morning at CES, B. Riley comes away "with the understanding that not only are cost synergies from the ROVI/TIVO combination continuing to run well ahead of original expectations (which were $100MM run rate in the first 12 months), but that TIVO is in a strengthened position to i) drive ARPU meaningfully higher for the legacy I-Guide and Passport subscribers of ROVI; and ii) realize increased MSO penetration in international markets as a combined entity."
Firm notes that "the competitive pressures of the skinny bundle pushes by both DISH Networks (DISH) and AT&T/DirecTV (T) could force some MSOs to be more proactive vs. reactive; with the combined benefits of the best salespeople from both ROVI and TIVO (those with the strongest relationships to key customers), management is optimistic about the company’s ability to attack prospective customers with a full solution (guide, search, metadata, etc.) in one solution and at a better price that what would have been likely before from both companies."
Expects investors will begin to shift valuation thoughts to "a much stronger medium/long-term outlooks for the combined entity."
Price target: $31 (48% upside).
Analyst Eric Wold is ranked #164 out of 4,369 analysts by TipRanks.
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