Thursday, December 3, 2009

FusionIQ NEW BUY on DG Fastchannel Inc. (DGIT) - Price Target $ 36.00

DGIT the Digital Standard in Advertising !!

 

We are initiating a NEW BUY with a $ 36.00 price target on DG Fastchannel, Inc. (DGIT) the leading provider of digital technology services that enable the electronic delivery of advertisements, syndicated programs, and video news releases to traditional broadcasters, online publishers and other media outlets.

 

 

Our Rationale is as follows:

 

  • DGIT IS THE MARKET LEADER - DGIT provides delivery services for 22 of the top 25 advertisers, as ranked by Ad Age.  The company works with 90% of the top 100 US advertisers
  • DGIT has High, Consistent Revenue Growth - Revenues have been up an average of 45% per year since 1995.  Adjusted EBITDA has been up 105% per year since 1995Ranked # 5 on the Fortune “Fastest Growing Companies in the World” list and on the Fortune Small Business list of the nation’s 100 fastest growing small public companies in 2009.
  • DGIT has solid Growth in High Definition MarketDG FastChannel’s high definition revenue grew from just over $1 million in 2006 to $34 million in 2008 !!  The company has already earned $38.4 million in revenue during the first 3 quarters of 2009 and projects full year 2009 revenue of $55 million.
  • DGIT is seeing a cyclical Bottom in its 2nd largest SegmentRevenue from the auto vertical (second largest for DG), which was down 20-30% in the first half of 2009, appears have improved in 3rd quarter ‘09 and will likely rebound further in 2010.
  • Great Balance Sheet – De-leveraging. DG completed an equity offering of 2.9 million common shares in 2Q09 for $52 million in net proceeds, all of which were used to reduce bank debtAt the end of the 3rd quarter, debt was down to $107.8 million or net debt of $81.  That is a net debt to EBITDA ratio of a mere 1.1x !!!
  • Additionally DGIT announced a partnership with Google TV whereby Google will use DG’s technology for video content ingesting, quality control and other workflow automation that will allow small business advertisers to buy remnant TV spots and upload their video ads !

No comments:

Post a Comment