Zacks Investment Research downgraded shares of TiVo Inc. (TIVO) from OUTPERFORM to NEUTRAL on May 17, 2013, with a target price of $13.00.
TiVo's fourth quarter loss was wider than the Zacks Consensus Estimate. However, the company comfortably surpassed the revenue consensus mark in the quarter. The company provided an optimistic guidance despite higher litigation costs in the first quarter. We remain optimistic on TiVo's growth potential owing to new partnerships, product launches and international expansion opportunities. Moreover, the successful monetization of patents also ensures a recurring revenue stream for the company over the long term. Nevertheless, we believe that pending patent litigation issues remain a major headwind in the near term. Moreover, increasing competition from cable and satellite providers will also hurt profitability going forward. This compels us to downgrade our recommendation on TiVo from Outperform to Neutral. We set a price target of $13.00.
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