MGI Research

Thursday, Feb 23rd

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MGI Quant

Utilizing the MGI Index and MGI Change Vector in combination with key valuation metrics, MGI Quant helps improve the accuracy of company assessments and provide an independent benchmark of overall company performance. Investors and company executives use them to identify areas for improvement in valuation, operating performance, and bottom line results. MGI core quant data is a major input into MGI Advisory Services and Benchmarking engagements. MGI Quant scores are available for over 500 global technology vendors, and are updated on a continuous basis. Unlimited access is available by Subscription, and select research notes are available in the Research Store. Subscribers get priority access to all published research and data as well as analyst consultation.


MGI Cloud 30 Index Update FEB 2017

MGI Research has updated the composition of MGI Cloud 30tm Index by introducing new positions to replace those that were acquired and switching out companies that have so far not lived up to their original intent to be a significant cloud computing player. 

Attachments: (For Subscribers)
File
Download this file (MGI Research MGICloud30 Index Update Feb 2 2017.pdf)MGI Cloud 30 Index Update Feb 2017

MGI Forecasts - AGILE MONETIZATION PLATFORMS (AMP) 2016-2020

This MGI FORECAST provides a quantitative estimate of the total addressable market (TAM) for Agile Monetization Platform software from 2016 to 2020.

Internet Valuation: Gaps and Targets Nov 2013

Using Internet company valuation formulas published on Oct 29th 2013 in “Internet Valuation 2013: What Price is Right?”, we analyze gaps between actual and predicted prices of Internet equities. This research report (click on attachment below) highlights target prices for Internet companies such as Twitter, Facebook, Linkedin, EBay, Priceline, TripAdvisor, AOL, Google and many others. As this research note went to print, Twitter (NYSE: TWTR) IPO was priced at $26 per share. We include Twitter in our valuation gap analysis based on that price and spotlights its target prices based on current Twitter run-rate as well as its 2014 targets. All other data reflects prices as of end of trading on Nov 6 2013.

Attachments: (For Subscribers)
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Download this file (MGI Research INTERNET Price Targets NOV 2013.pdf)Internet Valuation Gaps and Targets - Nov 2013

Internet Valuation Oct 2013 - What Price is Right?

Internet ValuationThe IPO of Twitter has put a spotlight on a core question:  What is an Internet company worth and what is the right combination of valuation metrics? Why does Linkedin have a higher valuation multipe than Facebook? How much will Twitter be worth over the longer term horizon? Which Internet firms are mispriced?

In this research report we describe a practical formula-based valuation approach for valuing Internet companies of all sizes. Our quantitative analysis indicates that growth is the most important factor in determining valuation of an Internet business.

As of October 29th 2013, shares of publicly traded Internet companies have generated an average YTD return of 58.52%. A number of firms, e.g. Yelp, Trip Advisor and a few others, have seen moves of well above 100%. Internet companies on average trade at over 7X revenue with larger firms fetching multiples north of 11X. Venture funding and secondary market sales of privately held Internet firms are priced generously even for firms that have little or no actual revenue. Any hint at an Internet bubble invites fiery reminders that one is paying for exceptional growth. The purpose of this research note is to identify parameters and metrics that drive valuations of Internet social media companies and provide key holders, investors and bankers with a simple and practical alternative valuation model - not to call attention to inflation in equity prices.

In the Internet and social media context traditional valuation methodologies such as DCF are often unusable. We have applied our Empirical Valuation Modeling (EVM) approach that has been well-tested in the SaaS space to Internet companies. The result is a simple set of guidelines and formulas for valuing Internet businesses. We have previously tested the EVM approach after the Facebook (FB) IPO and at the time generated a price target of $18 – a level that FB eventually not only hit but stayed around for a long time. The EVM approach has proven significantly predictive of take-out prices for SaaS companies with several acquisitions priced within 5% of the target predicted by our valuation model. Some of the SaaS acquisition targets had announcement date pricing moves of up to 40%. This research report describes the methodology, assumptions and results of our application of EVM to the Internet sector, highlights pricing anomalies, provides recommendations for formula use and spotlights the potential valuation of Twitter. We analyzed various operating and valuation parameters of 35 publicly traded Internet firms of various sizes and included data from Twitter data based on its pre-IPO filing.

Attachments: (For Subscribers)
File
Download this file (MGI Research INTERNET Valuation OCT 2013.pdf)Internet Valuation Book Oct 2013 - What Price is Right

DELL Go Private Deal - a Reality Check

Historical Valuation Multiples (EV/Sales) of Large Hardware CompaniesThe circumstances surrounding DELL go-private transaction are beginning to erode the company brand equity with enterprise buyers. The Dell Special Committee evaluating offers from a group led by Michael Dell and Silver Lake private equity fund and one from a group led by Carl Icahn and Southeastern Asset Management is under pressure to clearly articulate what is in the best interest of current shareholders, assess the opportunities, spell out the risks and communicate those clearly to holders.

The DELL buyout transaction appears in serious trouble. Both the Michael Dell offer and even the Carl Icahn offer of cash and a stub have failed to stimulate investor animal instincts. The investor apathy translated into a lack of votes and thus postponement of two shareholder meetings.

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