|Written by GSCR Staff|
|Friday, 30 May 2014 07:03|
By now most of you have heard that Apple, Inc. (NASDAQ – AAPL) is buying the hip music streaming and audio equipment company Beats Music for $3 billion in its largest acquisition ever.
This created a huge buzz on Wall Street yesterday as it appeared Apple was buying ‘cool’ as part of the deal includes bringing on Beats founder, recording mogul Jimmy Iovine. Is Apple going to develop a new paradigm and use M&A to contribute to a significant portion of its future growth? However you feel about this question, the fact that it is being asked makes it time to ponder the corresponding market dynamics.
This week’s theme has been all about the Dead Cat Bounce. Looking for candidates in the technology space along those lines may be profitable as capital may flow into this sector driven by speculation about M&A activity from the major players like Apple, Google, Inc. (NASDAQ – GOOG), and even Microsoft Corporation (NASDAQ – MSFT) could drive related small cap stocks up.
Bazaarvoice, Inc. (NASDAQ – BV - $6.80) is a stock that has been nearly cut in half since about Labor Day of last year and is reflective of these prospects. Last month, the Company reached a deal with the U.S. Department of Justice in an antitrust action over a 2012 acquisition. The stock slid a little since then, but appears to have reached an inflection point as the short term technical analysis is now very bullish in the Daily Moving Average metric.
Bazaarvoice has customers in the retail, consumer products, travel and leisure, technology, telecommunications, financial services, healthcare, and automotive industries and markets its products and services primarily in the United States, the United Kingdom, Australia, France, Germany, and Sweden. The Company provides a suite of products and services that offer technology platforms that increase brand awareness, drive to increase sales, and improve loyalty through customer analytics. There are about 70 million products in the Bazaarvoice network.
The sluggish economy could actually be a major driver by end-user firms seeking to gain any competitive edge possible by using products from Bazaarvoice. The Company continues to expand and innovate with its product line. This week, the Company released a new Extend integration module with hybris software, the world's fastest-growing commerce platform provider, which enables hybris customers to quickly and easily implement Bazaarvoice Conversations with the hybris Commerce Suite. Earlier this month, the Company released Bazaarvoice Curations, which builds on the Bazaarvoice Conversations platform expanding the consumer engagement and influencing potential buyers on behalf of its end user clients.
Consensus analyst’ estimates of a 10% CAGR for the next two FY make BZ an attractive growth prospect while the technology M&A effect could drive the price up to the $8.00 level over the summer.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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