Technology company Audinate Ltd (ASX: AD8) shares are trading not far off their 12-month low after the company reported its first-half result this week, raising the question, is it time to buy the dip?
The company's shares have been on the slide for much of the year, having fallen from a high of $10.44 at this time last year.
Brokers Macquarie, UBS and Morgan Stanley have had a look at the company's results this week and have come up with a range of scenarios for where they think the shares will go over the next year.
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Revenue growth booked
But first to the results. On Monday, Audinate reported revenue of US$21.2 million, up from US$18.9 million for the same period last year.
The company said its gross margin increased from 82.6% from 82.2% reflecting a shift to higher-margin software solutions, but underlying EBITDA was negative to the tune of $2.3 million.
The company said 516 original equipment manufacturers were now using its Dante software suite, and it had also launched its Iris technology which it said, "extends Dante into intelligent camera control and cloud-enabled video production workflows, creating a new recurring-revenue stream and strengthening Audinate's position across video and AV control applications''.
The company's Chief Cxecutive Officer Aidan Williams said it was a solid result.
Audinate delivered a strong first half, returning to revenue growth while maintaining our industry-leading gross margins. We have strengthened our market position with continued design-win momentum, new product introductions and the successful launch of Iris, which extends Dante further into video and cloud-enabled video production workflows.
Analysts diverge on value
UBS, in a note sent to clients this week, said the company was trading at very low multiples and "we would argue that very little is being priced in at current levels''.
UBS has a price target on the shares of $6.10, reduced from $7.10, but still well above the current level of $3.57.
Morgan Stanely has a price target of $5 on Audinate shares and said the first half result showed an overall recovery in growth.
Meanwhile the analysts at Macquarie were less hopeful about the outlook for the share price, with a target price of just $3.20 and a neutral rating on the stock.
The Macquarie team said investor expectations were now rebased following the share price falls and "we think the cyclical downgrade cycle is over in the underlying … business, with this result muted by Iris costs.''
Audinate was valued at $278.3 million at the close of trade on Monday.
