Sonic Foundry, Inc. (SOFO) Research Update Released
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New York, NY - January 7, 2014 (www.investorideas.com newswire) On January 6, 2014, Taglich Brothers released an updated research report on Sonic Foundry, Inc. (SOFO) and reiterated a Speculative Buy rating with the 12-month price target raised to $12.20 per share from $10.50 due to projected sales growth. The report noted the following key investment considerations:
US domestic growth potential is substantial. Only 10,000 out of 225,000 US higher education classrooms are equipped with a comprehensive lecture capture system.
1,500+ US education institutions use SOFO’s Mediasite lecture capture recorder technology in approximately 4,100 classrooms. Leverage of existing relationships and new institutional accounts are driving growth.
The global lecture capture education market is vast, with approximately 17,000 international post-secondary institutions. We estimate less than 1% of foreign educational institutions use Mediasite technology.
Student demand is driving the lecture capture market. Studies indicate lecture capture improves grades, enriches the learning experience, and increases student recruitment.
In 4Q13 sales (reported 11/21/13) increased by 8.7% to $6.8 million due to a 17.9% increase in product sales reflecting a 28% increase in Mediasite recorders to 414. The loss increased to ($0.17) per share vs. ($0.03) due to higher than anticipated expenses. We forecasted sales of $6.9 million and EPS of $0.03 per share.
For FY14, we project EPS of $0.30 per share (unchanged) on sales of $36.6 million, up from our prior sales forecast of $31.9 million. Two acquisitions account for our higher sales estimate. EPS forecast is unchanged, reflecting gross margin improvement offset by higher operating expenses, reduction in non-operating income, and increase in average shares outstanding.
For FY15, we project EPS of $0.76 per share on sales growth of 21.4% to $44.4 million reflecting 1,905 Mediasite units sold vs. 1,655 in FY14. We anticipate better gross margin and leveraging of operating costs.
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Sonic Foundry, founded in 1991 and headquartered in Madison, Wisconsin is a global provider of technology-based webcasting lecture capturing, and knowledge management to higher education institutions, corporations, and government agencies. Its technology is based on Mediasite® a patented webcasting platform.
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