In a deal worth $20 million
) announced the acquisition of the advertising analytics company,
TRA Inc. The acquisition is expected to close this month. Following
the takeover, management expects an increase in TiVo's adjusted
EBITDA for the next fiscal year.
TRA Inc. provides analytics software to advertisers and TV
network operators, which correlates 1.5 million viewer's TV viewing
and their purchasing habits. Through the various analytics
tools, TRA's clients can identify their targeted audience. This
would be beneficial for TiVo, as the company plans to set up
another business unit called TiVo Research & Analytics after
the completion of the acquisition, which would provide information
to its clients about the target audience. Eventually, this would
improve TiVo's chances boost its ad revenues.
Moreover, TRA Inc.'s incremental revenue would positively impact
TiVo in the long run. Also, TRA's clientele includes in excess of
45 brand clients like
Procter & Gamble Co.
) and Oscar Meyer and 27 network clients such as
), A&E Television Networks, ION Media to name a few.
We are optimistic about TiVo's long-term growth potential due to
new partnerships, product launches, international expansion and
accretive acquisitions. We believe that TiVo will continue to
witness strong subscriber growth based on its partnerships with
Virgin Media Inc.
), RCN, ONO, Charter Communications,
), Suddenlink and DIRECTV going forward.
However, pending patent litigation issues (Verizon, Motorola and
Time Warner), rising subscription acquisition costs, higher
hardware and sales & marketing costs are expected to impact
TiVo's profitability over the next few quarters. Increasing
competition from cable and satellite providers could also hurt
profitability over the long term. Thus, we have a Neutral
recommendation on TiVo over the long term (6-12 months).
Currently, TiVo has a Zacks #3 Rank, which implies a Hold rating
for the short term (1-3 months).
CBS CORP (CBS): Free Stock Analysis Report
COMCAST CLA SPL (CMCSK): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
TIVO INC (TIVO): Free Stock Analysis Report
VIRGIN MEDIA (VMED): Free Stock Analysis Report
To read this article on Zacks.com click here.