Vizio Holding Corp.

VZIO Details

Vizio Holding Corp. (NYSE: VZIO) is a technology enterprise that offers Smart Televisions (TVs), soundbars, and SmartCast operating systems to customers in the United States. It earns money by shipping these products to distributors around the country and directly to consumers via its website. VZIO also generates income by monetizing its digital platform. In addition, VZIO introduced Platform+, which consists of SmartCast, it's award-winning Smart TV operating system that allows a fully integrated entertainment solution, and Inscape, which powers its data analytics and services. VZIO completed its Initial Public Offering (IPO) on March 29, 2021, at an issue price of USD 21.00 per share.

Revitalized Collaboration: VZIO and VideoAmp, a software-driven advertising company, announced their renewed partnership on October 06, 2021, supporting VideoAmp's cross-screen measurement and currency solutions. The previously extended partnership, which was set to expire at the end of FY21, will now last through the end of FY25, with the option for VideoAmp to extend.

New Integrations: VZIO announced on September 09, 2021, that fuboTV, the premier sports-first live TV streaming platform, is now accessible on VZIO SmartCast. This follows the September 01, 2021 news announcing the addition of the HBO Max app to VZIO SmartCast. HBO Max is WarnerMedia's direct-to-consumer streaming service, offering over 13,000 hours of selected premium entertainment.

H1FY21 Results: The company reported a rise of 24.90% in total net revenues to USD 906.81 million during H1FY21 (ended June 30, 2021) compared to USD 726.00 million during H1FY20 due to an increase in the number of units shipped and advertising revenue. However, it witnessed a net loss of USD 10.66 million during H1FY21 vs. a net income of USD 26.61 million reported in H1FY20, primarily due to a significant increase in selling, general and administrative (SG&A) expenses. As of June 30, 2021, the company had cash & cash equivalents of USD 365.38 million and no outstanding debt.

Key Risks: VZIO derives the majority of its device net revenue from a small number of retailers. During H1FY21, its top four clients contributed 74% of its device net revenues. As a result, the loss of any of these significant clients might harm the company's financial condition. Furthermore, smart TV sales revenue accounted for 77 % and 88% of the company's net sales in H1FY21 and H1FY20, respectively. As a result, any unfavourable shift in demand for smart TV products might put pricing pressure on the firm and result in a loss of market share, negatively impacting its operating performance.

Outlook: VZIO estimates its Q3FY21 Platform revenue to be in the range of USD 76 - 82 million, with a gross profit of about USD 55 - 60 million, as of August 04, 2021. It also anticipates its adjusted EBITDA to range between USD 20 and 25 million.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

 (Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

VZIO Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: VZIO's stock price has fallen 23.56% in the past three months and is currently leaning toward the lower end of its 52-week range of USD 17.25 to USD 28.80. The stock is currently trading below its 50 DMA level, and its RSI Index is at 45.14. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 18.44. Considering the company's current trading levels, negative bottom line, macroeconomic concerns, current valuation, and technical indicators, we recommend a "Sell" rating on the stock at the current price of USD 19.65, down 0.08% as of October 15, 2021, 10:46 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and industry information have been taken from REFINITIV.  

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