Macrovision Upgraded to Buy, Shares Jump

by: Eric Savitz January 10, 2008 | about stocks: GMST / MVSN    

Eric Savitz

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Macrovision (MVSN) shares are up sharply Thursday morning following an upgrade of the stock by Jefferies & Co.’s Ross MacMillan to Buy from Hold. He set a $23 price target on the stock.

The key question for Macrovision is whether or not the company completes its pending merger with Gemstar-TV Guide (GMST). MacMillan says there is no guarantee that the deal happens; he says “much depends on what the proxy filing says and what the advisory services decide.”

On a stand-alone basis, he says, the stock trades at just 5.5x enterprise value to EBITDA.

If the deal happens, he says, the company is likely to dispose of non-core businesses. MacMillan thinks Macrovision’s software business is worth $300 million. He says the Gemstar Media Networks unit is worth $400 million. He says there is “option value” in the Gemstar interactive programming guide as an advertising platform, although he ascribes no value to that piece today.

The bottom line is that MacMillan thinks there is money to be made in the stock. “The stock looks very cheap if the GMST deal does not get done,” he says. “If the deal does happen, we think investors will get paid, but it may take longer.”

Macrovision Thursday is up $1.28, or 8%, to $17.27.

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This article has 1 comment:

  •  
    Jan 10 01:41 PM
    The problem with them buying Gemstar is that the real value is embedded in Gemstar's years of tax losses. Assuming that the merger goes through, it will be very difficult to spin off these assets for at least two years without invalidating the tax benefits from Gemstar's losses. I suppose that there is always the chance that the merger doesn't go through, but to make a bet that they are going to start spinning off businesses seems pretty foolish given the comments that Macrovision has made regarding the Gemstar purchase.
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