Why Audinate (ASX: AD8) share price is considered a buy

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The Audinate SA Group (ASX: AD8) the stock price is currently valued as a buy by the broker UBS.

What does Audinate do?

This is an ASX technology share that provides an offering called Dante, which is an audio over IP network. The company claims to be a global leader and is widely used in the professional live sound, commercial installation, broadcast, PA and recording industries.

It replaces traditional analog cables by transmitting synchronized audio signals over great distances to multiple locations at once, using only an Ethernet cable.

Why does UBS view the Audinate share price as a buy?

The broker rates Audinate as a buy with a target price of $ 11.75. This suggests that Audinate shares could rise nearly 20% over the next 12 months if UBS analysts are correct.

An important part of the story of UBS’s potential growth is the fact that Audinate now also offers video, in addition to the audio service.

To activate the video offer, it recruited a team in Cambridge (UK) to accelerate the deployment of its products. Six new Date Original Equipment Manufacturer (OEM) video products were released. New software video products are expected in FY 22.

One of the company’s goals for FY21 was to expand its training offerings to include Dante video and a wider range of languages. ASX action reported that 12,000 people have been trained on Dante’s video. There were 59 non-English speaking webinars and over 13,000 trained non-English speaking professionals. There was also a 47% increase in non-English speakers in the “contact” database.

Audinate also revealed that it is exploring acquisition opportunities to complement the Cambridge team to increase and improve video business.

Dante’s combined video and audio offering has seen a “good number” of winning designs, with a growing pipeline, but COVID has been a headwind.

Profit figures from FY21 results

Audinate’s share price is currently up around 15% since it gave investors a snapshot of its expected growth figures for fiscal 21 in July.

In the FY21 report, Audinate said it increased its revenue by 22.5% to US $ 25 million, with a gross margin of 23.1% to US $ 19.2 million.

On the operating profit front, earnings before interest, taxes, depreciation and amortization (EBITDA) increased 50.1% to AU $ 3 million. The net loss after tax improved 17% to a loss of AU $ 3.4 million. Cash flow from operations was positive at A $ 6.7 million compared to A $ 4.8 million.

Audinate growth prospects and share price

Investors often like to consider the year ahead when they think of a valuation of Audinate (or any company) stocks.

In FY 22, ASX Share expects to generate further design gains for Dante video and next-generation software products, launch more products, improve adoption of non-English speakers, increase cyber protection and implement business scalability initiatives.

Audinate Co-Founder and CEO Aidan Williams said:

The strong demand for our technology as the audiovisual industry recovers from COVID is particularly encouraging for Audinate’s long-term outlook. In the near term, we anticipate continued supply chain uncertainty for the remainder of calendar year 2021 and while this may limit revenue growth in the near term, we remain confident that Audinate can deliver revenue growth. in US dollars in historical range for FY22. Launch of Dante video products, record number of winning designs and establishment of a team of engineers in Cambridge, UK are important milestones in the implementation of our strategy to revolutionize the audiovisual industry.


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