Sonic Foundry, Inc. (SOFO) Research Update Released
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New York, NY - February 26, 2014 (www.investorideas.com newswire) Taglich Brothers released an updated research report on Sonic Foundry, Inc. (SOFO) and reiterated a Speculative Buy rating with a 12-month price target of $12.20 per share. 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. Two significant new US Mediasite placements are at the Stanford School of Medicine and Ohio State University.
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. In FY14, the company was awarded contracts from the University of Leeds for lecture capture and enterprise-wide video.
Student demand is driving the lecture capture market. Studies indicate lecture capture improves grades, enriches the learning experience, and increases student recruitment.
In 1Q14 sales (reported 2/13/14) increased 10% to $7.2 million due to higher services sales reflecting an increase in events services, partly offset by lower average selling prices of Mediasite recorders. The loss increased to ($0.17) per share vs. ($0.04) due to higher than anticipated expenses including $450,000 in acquisition costs. We forecasted sales of $6.4 million and loss of ($0.21) per share.
For FY14, we project EPS of $0.56 per share (up $0.26 from prior forecast) on sales of $36.9 million, up from our prior sales forecast of $36.6 million. Our higher EPS forecast reflects a net one-time gain of $850,000 due to two acquisitions.
For FY15, we project EPS of $0.83 per share on sales growth of 22.1% to $45.1 million reflecting 1,905 Mediasite units sold vs. 1,655 in FY14. We anticipate better gross margin and leveraging of operating costs.
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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