Video kills the radio stars

Här nedan följer Nordeas analys av Net Insight inför Q3 rapporten:

Q3 2007 preview: Video kills the radio stars We expect Net Insight to report an EBIT margin of 8.3% for Q3 (-10% in Q3 2006) when it reports the quarter’s results on 26 October, along with positive cash flow. Recently announced deals bode very well for the future, we believe. We maintain our estimates, our target price of SEK 8 per share and reiterate our Strong Buy recommendation. • Transmission of video and the rollout of digital terrestrial TV networks are still driving demand for Net Insight’s equipment. We expect the company to report Q3 revenue of SEK 60m and EBIT of SEK 5m, up from SEK 35m and SEK-3.5m a year ago, respectively. • We leave our estimates unchanged. On the back of recently announced deals – from Korean Telecom and an unnamed Chinese broadcaster – we find the increase in revenue that we foresee for Q4 and 2008 to be realistic, albeit not undemanding. • We still view Net Insight as a very likely acquisition target, given its competitive advantages in video transmission and its winning streak in the DTT segment. Its shares currently trade at very high multiples based on 2007 earnings. However, we believe this is justified given the company’s own merits – assuming that it continues to deliver solid profit growth, as we expect that it will. • Using a WACC of 11.5% our DCF calculation yields a value of SEK 8.6 per share. We maintain our target price of SEK 8 and reiterate our Strong Buy recommendation on Net Insight.