CFRA RAISES OPINION ON SHARES OF DOLBY LABORATORIES INC. TO BUY FROM HOLD
5:13 am ET February 6, 2023 (CFRA)
We raise our 12-month target price to $96 from $67, on a P/E of 29x, above its three-year historical average on promising growth in new technologies, and anticipated recovery in foundational audios, using our next-12-month EPS view of $3.32. We increase our FY 23 EPS forecast to $3.45 from $3.37 and lift FY 24's EPS to $3.73 from $3.46. DLB posted Q1 sales of $335M, above consensus by $28.3M, and non-GAAP EPS of $1.11 beat by $0.32. Results were better than feared (-5% Y/Y) from higher-than-estimated shipments in its broadcast and gaming segments, offset by weakness in PCs, mobile, and other consumer electronics (CE), consistent with trends in the broader market. DLB guided for FY 23 revenue to grow in the low-single digits. While the market environment continues to be uncertain, we see the potential for growth upside as the CE and PC markets improve in H2 FY 23. We note rising market traction with Dolby Atmos and Vision as partnerships with end-market vendors grow and use cases broaden into more verticals.
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