Brightcove Stock Breaks Out, With a Further Potential of 60% Growth

brightcove stock
iStock.com/Kalawin

Brightcove Is Getting its Act Together

Many of the top software applications are driven by the cloud, since it’s a highly effective and economical way for many companies. I have profiled numerous cloud plays in the past, and now I will present Brightcove Inc (NASDAQ:BCOV).

Brightcove stock has been rallying from a 52-week low of $5.68 in June 2017, trading at a range high of $10.65 on May 25.

Brightcove Inc is an emerging developer of cloud-based software that helps companies deliver and publish high-quality video content. The company has a broad global following, with around 5,000 clients in over 70 countries.

BCOV stock has been in an impressive uptrend, as the small-cap technology company steadily expands its revenue base and, in 2019, is set to turn its first profit.

Advertisement

Compared to the S&P 500 and Nasdaq, Brightcove stock has outperformed, with a 61% share price appreciation over the past year and 43% growth during the past three months.

Chart courtesy of StockCharts.com

The strong fundamentals and bullish golden cross on the BCOV stock chart suggest that the stock is heading higher, toward the $16.00 level that the stock recorded in 2016.

My Bull Case for BCOV Stock

Brightcove is a small company, but it has managed to grow its revenues in each of the past four years, for a compound annual growth rate (CAGR) of 9.1%.

2017 was disappointing for Brightcove, with its worst growth rate in four years, but things appear to be looking better.

Revenue growth is estimated at 7.6% (to $168.0 million) in 2018 and at 8.8% (to $182.7 million) in 2019. (Source: “Brightcove Inc. (BCOV),” Yahoo! Finance, last accessed June 7, 2018.)

Year Revenue (Millions) Growth
2013 $109.9
2014 $125.0 13.8%
2015 $134.7 7.8%
2016 $150.3 11.6%
2017 $155.9 3.8%

The thing that continues to elude Brightcove has been its inability to turn a profit on both a generally accepted accounting principles (GAAP) and adjusted basis.

On a positive note, the earnings trend is positive. Brightcove could turn an adjusted profit of $0.02 per diluted share this year and as much as $0.17 per diluted share in 2019.

Brightcove’s move toward profitability is encouraging, and will help produce consistent positive Free Cash Flow.

Year Free Cash Flow (Millions) Growth
2013 $3.9
2014 -$2.03 -152.1%
2015 $7.69 478.8%
2016 $5.9 -23.5%
2017 -$10.6 -279.4%

Analyst Take

Brightcove appears to be turning the corner with the attainment of profits.

BCOV stock is attracting some insider buying, to the tune of 58,368 shares purchased during the past six months.

A continuance of the cloud trend could see Brightcove stock reach the $16.00 level, representing a potential increase of around 60%.