RealNetworks (RNWK) Gains as Analyst Sees 3-4-Bagger with Upcoming Catalyst

RealNetworks (NASDAQ: RNWK) is modestly higher Thursday (+1%) on volume that is nearly twice the norm. Contributing to today's upside is a note from B. Riley analyst Eric Wold. In it, Wold said a potential Rhapsody stake sale could drive upside in the stock.

Wold pointed to a NY Post article Tuesday which suggested Sony Music Entertainment and/or the Chairman of its Epic Records division (L.A. Reid) is considering acquiring a large stake in streaming music service Rhapsody. Importantly for RealNetworks, it owns a 43% stake in Rhapsody.

Wold said while the report remains speculation at this point, "if true, it could provide two things for our positive RNWK thesis that we have been waiting for since last October’s initiation: a visible valuation metric for Rhapsody and a signal that management is taking the steps towards an ultimate monetization event."

He added, "Given our belief the current enterprise value for RNWK includes zero value for its Rhapsody stake (which we have estimated could be worth more than $15.00 per share alone to RNWK shareholders), we believe the risk/reward at these levels is extremely favorable and a monetization event for Rhapsody has the potential to drive shares higher by as much as 3-4x."

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

Shares of RealNetworks closed at $5.83 yesterday.

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