A Bold Bet on TiVo

Analysts often take a revisionist approach when it comes to dishing out price targets. As a stock moves above or below the mark, Wall Street pros will often break out the Liquid Paper and drum up a new high watermark.

Then you have the case of Janney Capital analyst Tony Wible. He's reiterating his buy rating on TiVo (Nasdaq: TIVO  ) this morning, but bumping the stock's price target from $17 to $19. It's a surprising move, since TiVo's shares have been languishing in the single digits since being dealt a setback in its legal battle against DISH Network (Nasdaq: DISH  ) . A nine-figure judgment weighs in the balance, so it's only natural to see sentiment shift when the scales of justice go one way or the other.

If TiVo emerges victorious, it will be able to pad its coffers and have a leg up on enforcing its patents elsewhere. If it loses, it will forgo the meaty prize and also risk some of its licensing partners if TiVo's patents are unenforceable. After all, why would DirecTV (NYSE: DTV  ) and Comcast (Nasdaq: CMCSA  ) team up with TiVo if time-shifting on digital video recorders is fair game?

Wible remains upbeat, as if one couldn't tell from the aggressive target hike. He sees more deals, especially internationally where TiVo is just getting started. There is also the long-standing dream that TiVo can sell targeted ads as folks scan through pre-recorded shows.

Unfortunately, any kind of aggressive marketing will probably be a major turnoff to its paying users -- and that's a tenuous lot of customers since TiVo continues to shed subscribers.

There are also looming concerns that the big boys are moving in. Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) will be hitting the market with set-top boxes in a few weeks. They don't do what TiVo does, but the push to consolidate home-theater gadgetry may find folks opting to go with web-served content on demand for free instead of digital recording on a subscription basis.

I spoke to TiVo CEO Tom Rogers earlier this month. While he naturally can't discuss the patent infringement case against DISH, he stresses that TiVo stands out from other set-top players in that they have been working with cable networks and broadcasters for years. Apple and Google have hit more than a few speed bumps in trying to get all of the major channels to play along.

In the ideal scenario, Apple and Google hit the market without the full support of the content creators and TiVo favorably settles its differences with DISH. It's a one-two punch that would definitely get TiVo's stock back into the teens -- but Wible is early to the party.

Do you have a TiVo subscription or rely on a different DVR solution? Share your thoughts in the comment box below.

Google is a Motley Fool Inside Value selection. Google is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz has a pair of TiVo boxes in his home, but he owns no shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On September 23, 2010, at 8:34 AM, Valuestocksonly wrote:

    LOVE MY TIVO, LOVE MY SIRIUS!

  • Report this Comment On September 23, 2010, at 2:37 PM, MonicaPell wrote:

    Great article. I'm glad to see some other players mentioned besides Google and Apple. You mentioned some smaller players too. Another one that some may not be aware of is Seetvpc.com. They offer a software solution to online TV - no hardware box required for it. Seems like this is better for those on-the-go, wanting TV access from their laptop.

  • Report this Comment On September 23, 2010, at 2:38 PM, MonicaPell wrote:

    Great article. I'm glad to see some other players mentioned besides Google and Apple. You mentioned some smaller players too. Another one that some may not be aware of is Seetvpc.com. They offer a software solution to online TV - no hardware box required for it. Seems like this is better for those on-the-go, wanting TV access from their laptop.

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