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Author: newsreporter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1173  
Subject: Merrill Lynch Comments Date: 2/16/2005 4:52 PM
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Macromedia To See Higher Valuation On Expanding Revenue Base
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Merrill Lynch raised the price target for Macromedia (nasdaq: MACR - news - people ) to $45 from $32 and said it expects continued earnings and sales growth for the software developer. "Our investment premise on Macromedia has been fairly simple--namely, that the business could grow this fiscal year even in the absence of a major release of its principal 'MX' design and development applications as the combination of its various new businesses are expected to more than offset the presumed aging effects of the MX 2004 release," Merrill Lynch said. "Beyond that, we've expected that there would be a further increase in revenues and earnings in fiscal 2006 as a result of the late summer 2005 releases of various MX products coupled with the anticipated further increases in its Flash licensing, business user, and server software businesses." Recent comments from Macromedia management highlighted a trend in the base software business towards increased "volume-licensing” and premium product versions, according to Merrill Lynch. "Macromedia has historically and correctly been regarded as a product-cycle/packaged application company, but we think that as the product and channel mix evolve, there will be a more diverse and larger revenue base, leading to an improved valuation," the firm said. Merrill Lynch added that shares will continue to be moved by monthly sales data in the intermediate term. Last week, Macromedia said Nokia (nyse: NOK - news - people ) will integrate Flash technology into its Series 60 Platform. "The deal highlights the expanding revenue and unit potential for the royalty-based business, but no less important is the possibly meaningful impact as well on the company's still much larger software business as developers in new software for content creation," said Merrill Lynch.
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