Blinkx is well positioned to take part in the growth of online video advertising, said Goldman Sachs
Shares in video search engine firm Blinkx (LON:BLNX) were up by 6.8 per cent to 144.75 pence each at lunchtime today after Goldman Sachs initiated research on the company with a ‘buy’ rating and a 12-month price target of 250 pence.
The investment bank said that Blinkx’s strong technology (based on Autonomy’s Intelligent Data Operating Layer server) coupled with intellectual property it has developed itself gives it “strategic appeal”, but more importantly it positions it well to take advantage of structural growth in the online video advertisement market.
Goldman said that execution risks “remain high” due to Blinkx’s lack of scale, but the bank still expects the firm to generate three-year organic revenue and earnings per share growth in excess of 43 per cent and 60 per cent respectively. This is “not fully reflected” in the current share price, added Goldman.
Meanwhile, success in other applications areas, such as ‘Connected TV’ and ‘Transaction Hijacking’, would offer additional upside.
A catalyst to a strong share price performance, in Goldman’s view, will be Blinkx’s first half results for its 2012 financial year. These come out in November.
The bank expects a good half year and forecasts revenue and operating profit (at the adjusted EBIT level) of US454.3 million and US$5.1 million respectively. Meanwhile, a key focus for investors in the forthcoming results will be signs of progress being made on the integration of Burst Media – which Blinkx acquired in the spring.
