Here it is...
NIA announced Synacor (SYNC) as its latest stock suggestion and #1 pick for the rest of 2012 on May 2nd at $8.84. Four days later, SYNC finished May 7th at $13.10 for a gain of 48%. Being that SYNC is the world's leading TV Everywhere platform company and the only publicly traded TV Everywhere pure play, NIA believes SYNC could become our biggest winner of all time. NIA believes SYNC is likely to report a record quarter when 2Q results are released in July and SYNC is likely to make massive gains in the months of June through August.
Bank of America is fully aware of the fact that the TV Everywhere industry is about to explode and when SYNC was rising away from them on May 7th, they downgraded SYNC from outperform to underperform in an attempt to drive the stock down so that they can accumulate cheap shares. After Bank of America's downgrade of SYNC, the stock declined $1.79 the next day to $11.31 and three days later it closed at $9.24.
Bank of America has just upgraded SYNC from underperform to neutral. Explaining their reason for upgrading SYNC, Bank of America said, "We are upgrading Synacor to Neutral due to the company’s moderating valuation versus online media peers. Synacor continues to be a strong fundamental growth story with our model showing 38% and 28% y/y revenue growth in FY2012 and FY2013, respectively. We view Synacor as a play on the rise of TV viewing on the web and still like Synacor’s high predictability and opportunity for a transformative customer win to significantly increase our estimates."
Bank of America has a price outlook of $11 and NIA believes SYNC is a steal below $11. Needham & Company recently raised their SYNC price outlook to $13 and NIA believes SYNC could quickly make a run to $13+ on any kind of positive company news or bullish industry development. SYNC's 1Q revenues were up 64% year-over-year to $30.7 million and according to Compete.com, just about every single one of SYNC's clients have seen huge increases in traffic to their TV Everywhere portals in the month of April compared to the 1Q. If this trend continues for the months of May and June, NIA believes SYNC will blow away analyst estimates for 2Q revenues of $30.78 million.
Based on current analyst estimates of $30.78 million in 2Q revenues, SYNC is expected to grow 2Q revenues by 58% year-over-year with revenues being roughly flat compared to the 1Q. However, with SYNC's clients seeing huge increases in traffic so far this quarter, NIA believes SYNC could see 2Q revenues grow 5% to 10% from the 1Q, which would equal revenues of $32.24 to $33.77 million for the quarter and year-over-year growth between 66% and 73%.
If SYNC sees their 2Q revenue growth accelerate with year-over-year revenue growth surpassing 1Q growth of 64%, NIA believes SYNC is likely to become the hottest growth play on Wall Street. SYNC at today's closing price of $9.50 is possibly the biggest opportunity to become wealthy that NIA has ever discovered. Based on current trailing 12 month revenues of $103.04 million, SYNC is trading with an insanely low price/sales ratio of 2.48.
SYNC's revenue growth last quarter of 64% was substantially higher than Facebook (FB)'s revenue growth last quarter of 45%, yet FB is trading with a price/sales ratio of 25.91 or more than 10X higher than SYNC's price/sales ratio of 2.48.
SYNC receives a large part of their revenues from their deal with Google (GOOG). Last quarter, SYNC's TV Everywhere portals saw 271 million search queries through the Google search bar located at the top of each portal. This was an increase of 85% from 146 million search queries in the same quarter one year ago.
GOOG is currently trading for 4.9 times sales with revenue growth last quarter of 24%. If SYNC's 2Q revenues grow by 66% to $32.24 million, SYNC's trailing 12 month revenues will increase to $115.81 million. Based on $115.81 million in potential trailing revenues after 2Q results are released in July, if SYNC trades with a price/sales ratio equal to GOOG of 4.9, SYNC will be trading for over $21 per share by the end of July.
GOOG's revenues this quarter are projected to grow by only 22% from one year ago. If SYNC reaches 2Q revenue growth of 66%, it will mean SYNC is now growing at triple the growth rate of GOOG! Therefore, a price/sales ratio for SYNC of 4.9 is very conservative and NIA believes SYNC will still be extremely undervalued once it hits $21.
NIA has made it very clear from the beginning: We do not care about SYNC's day-to-day fluctuations. We feel very bad for anybody who became nervous when SYNC dipped this morning and sold their shares at $9. Those who sold at $9 will probably soon be chasing SYNC at $13-$15. If it wasn't for the weak market we believe SYNC would already be trading for $15+ right now. The market simply cannot get much weaker than it is today. QE3 is right around the corner and as the market gets back to normal in the upcoming weeks, NIA is confident SYNC will quickly rise to where it belongs. TV Everywhere will be the most explosive industry of the next six months and SYNC has positioned itself as the industry leader!
NIA isn't an analyst or investment advisor. Don't invest based on anything NIA says. NIA doesn't recommend for you to buy or sell any stocks. NIA never makes any financial projections or target prices.
Disclaimer: NIA currently owns 496,852 shares of SYNC. NIA initially purchased 350,000 shares at an average price of $8.53 per share. NIA has agreed to a 60 day holding period on its initial position of 350,000 shares but intends to sell these shares at some point in the future after the date of July 2nd, 2012. NIA has accumulated an additional 146,852 shares of SYNC. NIA intends to sell these additional 146,852 shares in the future and can do so at any time. NIA reserves the right to increase its SYNC position at any time.
NIA is not an investment advisor. This email is not a solicitation or recommendation to buy, sell, or hold securities. Never make investment decisions based on anything NIA says. This email is meant for informational and educational purposes only and does not provide investment advice.
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