It's one of the most widely fancied shares amongst small-cap enthusiasts in 2019 and today the sell-side research desk at UBS joined the party by giving sound processing business Audinate Ltd (ASX: AD8) a $9.45 share price target.
That means it has plenty of room to run higher from today's price of $7.36 if UBS is on the money with its 12-month share price target.
I must admit I haven't had the time to look into this high-flying small cap in much depth or value it, but below is a re-cap for investors on what the business model is.
Audinate's key product is its Dante enabled audio equipment that improves sound quality when installed in standard audio equipment.
The company's hardware and software allows professional audio equipment (speakers, mixers, mics, etc) to carry audio signals over a computer network, rather than using analog cables.
The advantage of this is that audio professionals can deploy audio solutions using existing computer networks instead of running analog cables throughout a building or venue.
Audinate reportedly also has a strong competitive position as its Dante product is preferred by audio equipment manufacturers, which all suggests the future is bright.
Foolish takeaway
Including shares due to come out of escrow on 30 June 2019, Audinate has around 61.3 million shares on issue to give it a $450 million market value with a $7.35 share price.
Given it posted an operating cash profit (ex-investing expenses, etc) of $2.16 million on revenue of $20.2 million for the nine months ending March 31 2019 we can see that the market and UBS are baking in a lot of growth to its valuation.
I expect the stock will be volatile in the 12 months ahead.
