BeaconNeuLion, NLN – T (Speculative Buy, TP: $0.70) In our opinion, 2018 could be a very interesting year for NLN from a catalyst perspective. Recall that in December, the company announced it had entered into an agreement to divest certain DivX assets, IP and subsidiaries for $41.5M.
We believe this transaction, once closed, will take cash to ~$65M (no debt) and remove a legacy slow growth asset transforming the company back into a pure-play video streaming infrastructure play (which could drive a multiple expansion).
Furthermore, we believe the company’s pipeline contains several large, companychanging deals, which could likewise act as near-term catalysts once closed.
We estimate the company is trading at a pro-forma valuation of ~0.65x EV/Sales (i.e. post the sale of DivX assets), which we view as being very attractive.