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Bazaarvoice Inc. - Initiation Note

Bazaarvoice Inc.

BUY (BV, $8.22)

A Voice Crying Out In The Wilderness - Initiating With A BUY Rating & $10.50 Price Target.

February 11, 2015

Ilya Grozovsky

212.417.8219

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Investment Conclusion. We are initiating coverage of Bazaarvoice (BV) with a BUY rating and $10.50 price target. In our view, the company’s platform holds many of the keys for retailers and brands to compete in today’s social commerce era. Brands and retailers dependency on social commerce continues to grow and is projected to account for $15 billion in sales in 2015. Products and brands that have reviews and ratings have been shown to differentiate their products and to provide a lift in page views and increased sales, as a result, Bazaarvoice’s platform, with its network effect of syndication, has become essential for any brand or product. These trends coupled with new products and improved customer retention should drive accelerated growth for Bazaarvoice going forward and translate to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). We are forecasting calendar 2014 revenues and adjusted EBITDA of $186 million and a loss of $17 million, respectively. For calendar 2015, we are estimating revenue and adjusted EBITDA of $212 million and a loss of $3 million, respectively. For calendar 2016, we are estimating revenues and adjusted EBITDA of $241 million and a positive $19 million, respectively. Our price target of $10.50 per share is based on our belief that Bazaarvoice shares should trade in line with the comparable company average Enterprise Value/Sales (EV/Sales) ratio of 3.0x as compared to the current 27% discount. The 27% potential upside to our price target results in our BUY rating on the shares.

BVSource: Company Reports, National Securities Corporation Estimates

Company Profile

Bazaarvoice, Inc., founded in 2005 and headquartered in Austin, Texas, connects businesses together to amplify the voices of people where they shop. The Company’s solutions, which are primarily provided through Software as a Service (SaaS) platform and are offered as a subscription basis, enable clients to capture and display online word of mouth about specific products and services, channel content into all the places where it will influence a purchase both within and outside its network and use business insights so they can act on what consumers want. The company currently serves over 3,000 global clients in diverse industries....


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