CFRA MAINTAINS HOLD OPINION ON SHARES OF DOLBY LABORATORIES, INC.
3:41 pm ET January 25, 2018 (CFRA)
We lift our 12-month target by $8 to $71, 24X our FY 18 (Sep.) EPS estimate, above peers at 22.5X, and at the high-end of its 5-year historical average of 23.3X. We raise FY 18's EPS estimate to $2.95 from $2.87 and keep FY 19's at $3.27, on FY 18 guidance. DLB posts Dec-Q EPS of $0.79 vs. $0.66, a $0.19 consensus beat, which excludes $155M in discrete tax expense. Revenues rose 8% (above consensus) driven by a large royalty recovery in licensing. While impressed with momentum in Dolby Vision/Atmos, we continue to believe this is largely reflected in recent multiple expansion.
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I've been waiting for their update, I have the utmost respect for CFRA and am fine with them tagging along with a Hold, raising their target/estimates as the numbers come in. I think double digit revenue growth is on the horizon and their conservative nature is to wait for it.
I also think the comments from last night about capital allocation may end up being the next major catalyst. They cited a 3-6 month timeframe for the repatriation process, which is on top of increasing cash flow with multiple tailwinds - Lower taxes, accelerating revenue growth, and a weak dollar. I could see something significant coming down the pike.
Cooters |
