CFRA RAISES OPINION ON SHARES OF DOLBY LABORATORIES TO HOLD FROM SELL
2:48 pm ET August 2, 2019 (CFRA)
We keep our 12-month target of $59, on 17.7x our FY 20 (Sep.) EPS estimate, which is roughly aligned with DLB's historical averages. We raise our FY 19 EPS estimate to $3.16 from $2.95, on DLB's Jun-Q beat but keep FY 20's at $3.33. DLB posts Jun-Q EPS of $0.76 vs $0.78, above consensus by $0.11, which excludes restructuring expenses ($0.29). Revenues came in at $302M, shy of consensus by $3M, on weakness in products and services (specifically cinema). DLB's FY 19 revenue outlook was reduced to $1.24B from $1.26B at the midpoint, on slower uptake of cinema products in China. While upside in licensing (Dolby Vision and Atmos) could help absorb some of the cinema weakness, we think DLB's goal of double-digit (10%+) revenue growth could be deferred to a later date given recent setbacks. DLB's topline miss would have been amplified if another licensing true-up ($7M vs. $8M in Mar-Q) was not recognized. While concerns remain, implied downside has been captured, leading to our upgrade. |
