Sunday, October 26, 2014

AVID: A quick review ...

Given that the important catalysts (which we touched on in late Mar. ‘14) associated with Avid Technology (AVID), are slowly but surely coming to fruition, we thought to provide a quick glimpse of how well it has outperformed the Russell 2000 and S&P 500 indexes.  Those catalysts include finishing up the restatements and possibly trading on NASDAQ again.  The restatements are pretty much done as the Company finally released its Q2 '14 10-Q and had the earnings call last week.  According to management, the Q3 '14 earnings release and 10-Q likely will be done on time.  In addition, the Company could begin trading on NASDAQ again by the end of this year, which is good news as it will impact the stock's liquidity positively and may attract institutional investors to the name.  In terms of performance, the charts below speak for themselves.

AVID vs Russell 2000 and S&P 500 since March 29, 2014

AVID vs Russell 2000 and S&P 500 since December 11, 2012

AVID closed on Friday at $10.05/sh.  For now, we continue to value AVID at around $11/sh, which by the way it hit on 9/12/14.  Our 5-year DCF resulted in a $9/sh equity valuation for AVID.  After adding what we expect is nearly $2/sh in tax savings by carrying forward its US NOLs, we think AVID could be worth approx. $11/sh.  We note that our margin assumptions are very conservative, and although from a top-line perspective, AVID will be a bit short of our expectations at the end of FY14, we think it can begin generating revenue growth in the high single to teens range in FY15, driven mainly by the 2016 Presidential election.  With all of this said, we will likely up our valuation of the Company at the end of this year.  Until then, we remain satisfied with how well it has performed when compared with the overall equity market. 

Some other AVID related posts:

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