An excerpt from a report released today by ThinkEquity Partners ...
With the macro shift in advertising dollars moving from TV to the newest content distribution channel, the Internet, we believe that [VitalStream's] recently announced EonStreams acquisition positions VSHI well to capitalize on this potential long-term, multi-billion-dollar opportunity. Moreover, EonStreams provides VSHI an up-sell opportunity to its installed base to offer content creators a monetization solution (more importantly, in a highly targeted and dynamic way) rather than just a cost center via CDN services. In our view, VSHI's unique CDN product offering should translate into incremental and higher-margin revenue opportunities as well as higher switching costs and lower churn rates among customers. Shares of VSHI currently trade at approximately 4.6x EV/'07 revenues. Our $16 price target is based on 7.7x our 2007 revenue estimate of $39M, which is an approximate 5 0% discount to AKAM's current valuation.
