AVTC: Initiating Coverage of AVT, Inc. With a Buy Rating
Zacks Small Cap ResearchBy Zacks Small Cap Research
By Marla Backer
We initiate coverage of AVT, Inc. (AVTC) with a Buy rating and $2.60 price target on the shares. AVT is a technology company focused on the automated retail industry. About five years ago, management began to reposition AVT to exploit the anticipated growth of automated retail. The company nearly doubled the size of its California production facility and assembled a team of experienced engineers and technicians to develop vending solutions and technologies. AVT invested in R&D and successfully produced patented and patent-pending technologies that have allowed it to compete with larger companies. In fact, the company believes that the enforcement of its patents could become a significant revenue stream over time and retained patent litigation firm One LLP earlier this week.
Reflecting its transition, revenue has grown from $2.3 million in 2007 to $15.3 million in 2012, a 46% CAGR. Management"s goal is to reach $100 million by the end of 2015. We believe that AVT can achieve economies of scale as revenue ramps and that secular trends support the prospects of robust growth. The domestic automated retail market is expected to grow from $740 billion in 2010 to more than $1.1 trillion in 2015, according to the IHL Group. Management also believes its VMS and TSv technologies will become vending industry standards because they enable retailers to improve customer convenience, increase revenue and reduce costs.
Operators are also using self-service machines to sell a broader range of products and more sophisticated items than the snacks, beverages and cigarettes that were once the mainstay of vending. One example of this is Utique, which operates automated machines that dispense luxury items. AVT will market and operate Utique automated stores. AVT is also the exclusive domestic distributor of Marley Coffee automated coffee stores. The company intends to install about 2,000 company-owned units within the next two years. AVT has already announced several distribution agreements and expects the Marley Cafes to generate more than $24 million in revenue by year-end 2014.
We believe the addressable market for AVT"s products and services is large. According to Vending Times magazine, an estimated 1.4 million vending sites are located nationwide in factories, offices, government buildings, colleges, hospitals and other public locations. In addition, there are approximately 14,000 hotels with 75 to 150 rooms. Many of these smaller hotels cannot afford to provide 24-7 room service or gift shops that operate during extended hours. Automated retail is a good solution that is available at any time.
The DVD market also offers proof of concept for the growth prospects of automated retail, in our view. Kiosks represented 46% of total physical DVD rentals in 2012, according to NPD Group, up from 38% in 2011 and only 2% just a few short years ago in 2007. The growth of the kiosk channel has come at the expense of bricks and mortar DVD retailers.
We believe that AVT shares present one of the only pure play ways to gain exposure to automated retail. The shares trade at a multiple of roughly 1X on a market cap to TTM revenue basis, which in our view does not mirror AVT"s expected growth. Our $2.60 price target implies a multiple of 1.2X our 2014 revenue forecast.
A copy of the latest research report can be downloaded here >> AVT, Inc. Report
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Könnte hier sehr schnell wieder Richtung 3 Dollar laufen - und das aus
dem Stand.......mal sehen, ob ich heute noch welche in USA "ergattern" kann
kurz vor Börsenschluss...........1,30 Dollar sind m. M. nach echt gute
Preise zum nachkaufen......!!
GoldenStock
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