Barrington analyst James Goss has reiterated their neutral stance on VZIO stock, giving a Hold rating yesterday.
James Goss has given his Hold rating due to a combination of factors concerning VIZIO Holding’s current market position and future prospects. The company’s recent financial performance showed a modest increase in revenue, which was primarily driven by their advertising growth in the Platform+ segment. Despite this, there was a notable decline in device sales, attributed to intense price competition and overall lower sales volumes. The growth in the Platform+ segment did, however, contribute to a gross margin expansion, balancing out the less profitable device sector. Strong advertising growth and the potential for increased monetization through the SmartCast system and viewer engagement improvements are positive indicators, yet they’re tempered by the persistent challenges in the device market.
Additionally, the pending acquisition of VIZIO by Walmart, valued at $2.3 billion, introduces a degree of uncertainty that affects the stock’s rating. While the acquisition has the support of VIZIO’s board and founder, and could provide a premium over the stock’s recent trading levels, regulatory scrutiny could delay or impact the outcome. The competitive nature of the device market is expected to continue post-acquisition, but the regulatory review process adds a layer of complexity to the potential deal closing, which is not assured. These factors, combined with the existing gap between the current stock price and the offer price, justify the Market Perform rating.
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VIZIO Holding (VZIO) Company Description:
VIZIO Holding Corp operates two distinct integrated businesses: Device and Platform+. Through Device business, it offers a range of high-performance Smart TVs designed to address specific consumer preferences, as well as a portfolio of soundbars that deliver immersive audio experiences. It generates revenue from the shipment of these devices to retailers and distributors across the United States, as well as directly to consumers through the website. The Platform+ business includes a state-of-the-art Smart TV operating system, SmartCast, which delivers a vast amount of content and applications through an easy-to-use interface.
