The Henry Fund Henry B. Tippie School of Management Ajay Kaushik Rajagopalan [
[email protected]] Dolby Laboratories, Inc. (DLB) March 8, 2016 Information Technology – Diversified Electronics Stock Rating Sell Investment Thesis Target Price $37-$44 DCF $40.65 Dolby Laboratories is a leader in audio technologies and since its inception in DDM $19.77 1965, it has established itself as the de-facto standard for lossless audio Relative Multiple $34.33 technologies. Dolby has supplemented its audio technology offerings with Price Data image technologies such as Dolby Vision. The current offerings of Dolby have Current Price $39.57 positioned it well to leverage the digital television boom in emerging markets. 52wk Range $29.87 – 41.84 The future growth prospects of Dolby are for good measure factored into the current stock price and hence this report recommends a sell rating. Consensus 1yr Target $39.00 Key Statistics Drivers of Thesis Market Cap (B) $3.97 The demand for Set Top Boxes (STBs) and Digital TVs is expected to grow Shares Outstanding (M) $101.35 at 7% CAGR through 2020 and this is expected to drive the broadcasting Institutional Ownership 94.6% licensing growth at 6.7% CAGR through 2020.(10) Five Year Beta 0.695 Wanda group is partnering with Dolby to open 200 new Dolby Cinema halls Dividend Yield 1.21% by 2024 and this is expected to drive the product segment growth at 16.6% Analyst Est. 5yr Growth 10.00% CAGR through 2020.(8,19) Price/Earnings (TTM) 24.42 Future Audio/Video conferencing products of British Telecom and Premier Price/Earnings (FY1) 18.8 Global Services Inc.