Tivo's (TIVO) 3 Sources of Surprise Profit Growth - Jeffries

Jeffries analyst, Brian Fitzgerald, published a brief review of Tivo's TiVo (NASDAQ: TIVO) results noting that the MSO business added a record number of subscribers, and the retail business now looks like it has a tailwind. He pointed to 3 areas that could provide surprise profit growth:

1) The new IP lawsuit vs. Samsung suggests TiVo could generate patent revenue well beyond '18. Many investors model patent revenue dropping to ~$0 following the expiration of key patents. TiVo's complaint is based on the Time Warp patent that was the basis for successful prior lawsuits vs. Dish ($500MM settlement), AT&T ($215MM+), Verizon ($250MM+) and Cisco/Moto/Time Warner ($490MM).

2) Nascent research business is largely overlooked. Longer-term, TiVo is focused on helping networks leverage its user data to serve targeted TV ads to its viewers. Several weeks ago, TiVo announced it would be providing its TV-ratings data for free.

3) Retail business may have hit an inflection point. This was the ninth straight quarter of double-digit gross sub additions, which grew +44% Y/Y to 52K. Success was driven by whole-home offering TiVo Roamio, plus the new DVR + streaming box TiVo BOLT, which launched to positive reviews.

No change to Buy rating or $18 PT.

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 $9.31 yesterday.

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