AudioCodes expected to sign OEM agreement with Siemens27 January 2005
In a report dated January 26, Merrill Lynch analysts Vivek Arya and Tal Liani say they see growth drivers in place for VoIP technology company AudioCodes (Nasdaq: AUDC; TASE: AUDC), and mention significant deals in the pipleline. They reiterate their "Buy" rating and $18 price objective. AudioCodes shares closed at $14.56 yesterday, giving the company a market cap of $550 million.
"We believe AudioCodes not only has the products, but also more importantly the customer relationships, to take advantage of the rapid growth in Voice over IP," Arya and Liani write. "In addition, with the recent convertible offering, the company has the balance sheet strength ($213mn gross cash, $97mn net cash) to grow faster via selective acquisitions.
"We note the growing contribution from Lucent, which is not yet a 10% customer, but is firmly enabling AudioCodes to diversify beyond Nortel who remains a 20%+ customer. Our checks suggest that another OEM (most probably Siemens) could also start contributing meaningfully in 2005. Meanwhile, the company alluded to a potential reseller agreement in Asia Pacific, which further supports our positive outlook for growth in 2005.
"As is typical, the company provided conservative guidance of 5-10% sequential growth and 6-7cent EPS, for the March quarter We are projecting sales to grow 7% seq. in Mar to $27 million, with EPS at 7cents.
"While we have more confidence about growth projections, we are maintaining our FY05 and FY06 estimates at this time, as we wait to see additional customer wins. Our 12-month $18 price objective is based on taking a 30x PE multiple on our $0.61 EPS estimate for FY06."
Source: Globes Online
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