Macquarie Remains Bullish on TiVo (TIVO) Following Cubiware Acquisition

Macquarie maintains an Outperform rating and $15.00 price target on TiVo (NASDAQ: TIVO) with the belief that the Cubiware acquisition will help enhance presence in Latin America.

Analyst Andrew DeGasperi commented, "TiVo is well on its way to achieving ex-IP positive EBITDA before the royalty cliff-hanger in CY2018. The company’s product lines are benefiting from consolidation in pay TV and ongoing unbundling trends. Moreover, the acquisition of Cubiware will enhance its presence in LatAm and Eastern European markets.

DeGasperi also added, "Cubiware will help expand TiVo’s distribution platform AND deliver new technology: 1) by expanding its distribution across 25 countries including in several fast-growing pay TV markets like Brazil and Indonesia. These amount to 12m pay TV subs spread across 40 MVPDs; and 2) provide TiVo with key middle-ware that can be deployed to cheaper set-tops. TiVo will pay US$16m upfront, US$12m over time and an earnout of US$25m. We expect a small contribution to adj. EBITDA and estimate top-line of US$5-10m/p.a. but see upside as TiVo upsells to Cubiware customers."

We are raising our FY16 and FY17 adj. EBITDA estimates by 1% and 3% to reflect FY1Q results and management’s guidance for lower expenses in FY2Q. Our US$15 target remains unchanged.

For an analyst ratings summary and ratings history on TiVo click here. For more ratings news on TiVo click here.

Shares of TiVo closed at $10.36 yesterday.

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