'SmartCast Is Just Getting Started': Analysts Initiate Coverage Of Vizio

Vizio Holding Corp VZIO has recovered nicely from a rough start after the stock opened at $17.50 following its IPO in late March.

Related Link: Why Did Netflix, Disney Apps Download Rates Take A Big Hit In March?

Within its first two days of trading, Visio shares climbed back above its $21 IPO price, which has served as a support level for the stock ever since.

Vizio has had a long road to the NYSE. The HD TV maker initially planned to go public back in 2015, but it nixed its IPO after the company agreed to a $2 billion merger with LeEco. However, the merger was never completed.

Today, Vizio’s primary source of revenue remains TV sales, but investors are excited about the growth prospects in its streaming and advertising businesses.

Several of Vizio’s IPO underwriters finally weighed in on the stock on Monday following the mandatory quiet period:

SmartCast Is Key: Bank of America analyst Wamsi Mohan said Vizio will benefit from a secular shift in TV viewership and advertising dollars to an over-the-top model. He said U.S. connected TV Ad spending will grow 35% annually and reach $21.37 billion by 2023.

“Vizio is set to benefit from this shift in spending given that it is one of the leading streaming platforms in the U.S.,” Mohan wrote.

Roth Capital Partners analyst Scott Searle said Vizio’s SmartCast is “just getting started.” Searle said Vizio’s smart TVs are enabled with the SmartCast platform, which will be Vizio’s main driver of customer engagement and monetization.

“SmartCast is the future driver of high margin growth, profitability and valuation, in our opinion,” Searle wrote.

Needham analyst Laura Martin said Vizio can follow the path Roku Inc ROKU paved in monetizing its hardware sales with high-margin revenue derived from its SmartCast platform.

Platform revenue is currently growing 20 times faster than device sales, and Martin said investors should expect the stock’s valuation multiple to expand as its revenue mix shifts more toward higher-margin sources.

“We believe Vizio has LT platform economics upside, with robust CTV advertising revenue upside in 2021,” Martin wrote.

Ratings And Price Targets: