On Mar 1, 2014, Zacks Investment Research downgraded
TiVo Inc. (
to a Zacks Rank #5 (Strong Sell).
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TIVO INC (TIVO): Free Stock Analysis Report
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Why the Downgrade?
TiVo reported a mixed fourth quarter of fiscal 2014. Although
earnings of 5 cents per share beat the Zacks Consensus Estimate
by a penny, revenues of $106.3 million were well below the Zacks
Consensus Estimate of $111.0 million.
During the quarter, the company completed the acquisition of
cloud-based content discovery and recommendation service
provider, Digitalsmiths. Owing to the gains from additional
subscriptions, TiVo management believes that it is on track to
exceed adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) of $100.0 million on an annual basis in
The company also believes that the highly efficient nature of
Digitalsmiths software will drive margins, going forward, as well
as contribute significantly to TiVo's overall adjusted EBITDA in
Although we believe TiVo has significant growth opportunities in
Western Europe and Latin America, given its partnerships with
local providers, increasing competition from satellite and cable
companies is a significant headwind.
We believe TiVo should to focus on increasing its subscriber
base, going forward. In order to do so, the company needs to
invest in product development and sales & marketing costs in
the near term. We believe rising operating expenses will continue
to negatively impact its profitability in the near term.
The Zacks Consensus Estimate for the first quarter of 2015 has
declined 28.6% (2 cents) to 5 cents over the last 7 days.
The Zacks Consensus Estimate for 2015 decreased 12.5% (4 cents)
to 28 cents per share over the last 7 days. The Zacks Consensus
Estimate for 2016 dropped 8.0% (4 cents) to 46 cents per share
over the same period.
Other Stocks to Consider
Some better-ranked stocks in the technology sector include
Micron Technology (
Splunk Inc. (
. All these stocks have a Zacks Rank #2 (Buy).