Top Picks 2020: SeaChange International (SEAC)

01/10/2020 5:00 am EST

Focus: TECHNOLOGY

Faris Sleem

Editor, The Bowser Report

SeaChange International (SEAC) — a Top Pick for the coming year — provides multiscreen, advertising, and premium video products and services, suggests Faris Sleem, a small cap stock expert and editor of The Bowser Report.

In 2013, the shares were trading at over $11 per share, but subsequently declined sharply until finding a bottom at $1.13 per share in December 2018.

Overall, from fiscal 2011 to fiscal 2019, revenues for the company slid 71% and EBITDA fell from a $41 million profit to a $13.5 million loss.

However, over the past few quarters, management has positioned the company for a significant turnaround, and Wall Street is taking notice.

Starting by stabilizing its expenses and debt, SeaChange has executed its operating expense control plan, resulting in a 11% increase in gross margin year-over-year (from 61% to 76%).

Chief Financial Officer Michael Prinn, the latest addition to SEAC’s management team, has led expense and debt reduction efforts since joining the company in October 2019.

To turn revenues around, SeaChange International landed eight significant customers with multi-year commitments for its Framework video delivery platform in the most recent quarter.

With these additions, SeaChange International is on track to exceed its goals for both new deals and revenue growth for the fiscal year, which ends January 31, 2020.

SeaChange’s shares appreciated over 220% in calendar 2019 as investors took note of the turnaround brewing. Regardless of this aggressive increase, we’re still optimistic that the stock will continue to create value for shareholders in 2020.

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