CFRA KEEPS HOLD OPINION ON SHARES OF DOLBY LABORATORIES, INC.
10:54 am ET November 15, 2019
We raise our 12-month target to $67 from $59, on 19.6x our FY 20 (Sep.) EPS estimate, in line with DLB's 5-year historical averages. We lift our FY 20 EPS estimate to $3.41 from $3.33 and set FY 21's EPS at $3.93. DLB posts adjusted Sep-Q EPS of $0.66 vs. $0.44, aligned with consensus. Revenues came in at $299M, topping consensus by $1M, on higher recoveries in Broadcast, which rose 14%. Adjusted gross margin was 85.4%, below expectations, on slightly higher cost of sales, which likely does not repeat. DLB's sequential outlook was below expectations for revenue ($285M vs. $297M) and EPS ($0.48 vs. $0.84), as a large boost from hybrid deals in Dolby Cinemas ($7M-$10M) from the year prior created tough comparables. Despite some slightly different seasonal trends (largely due to ASC 606), Dec-Q should still see an uptick in revenues from higher customer activity. Lower expected recoveries in Dolby Atmos and Vision create some uncertainty for FY 20, in our view. |
