ORLANDO, Fla., April 19, 2007 (PRIME NEWSWIRE) -- RedChip Visibility, a division of RedChip Companies, Inc. announced that it has issued a research update on Left Behind Games (OTCBB:LFBG).
Jim Altenbach, CFA, RedChip Research Analyst, wrote in the report:
"We still believe that Left Behind Games, Inc. shares are undervalued relative to its peers, based on our forecasted revenue and net income for fiscal years ending 2008, 2009, and 2010. As stated above, there has been a set back, and management now gives guidance for profitability by late 2007, so we are shifting our previous forecasts out a year. As stated, the low cash position of $70K and low stock price add material risk, as does the negative working capital.
"We believe that in the next five years, Left Behind Games will experience revenue growth of 60 percent and earnings growth rate of 69 percent per annum. This high growth expectation would justify a higher multiple, but as we already stated, because of the distressed state, this assumption is not currently proper. ERTS, ATVI, and TTWO trade at forward fP/Es of 39, 36, and 27, respectively. With the belief that the Company will recover, we will apply a discount because of the current distress and assume a fP/E of 23x for 2008, a discount to the average fP/E. We'll also assume this will hold into 2009, as we expect improvement in the profitability and cash situation, so this estimate doesn't reflect the normal decrease in outward forward P/Es. (Market derived forward P/Es decrease going out because of growing earnings, and if we had market samples for 2009, (they are not available), they would reflect this if EPS growth was expected). This means that market cap should be 48M M and 91M M for fiscal year ending 2008 and 2009 respectively.
"With the expectation of 35 million shares outstanding (assuming no share issuance or other dilutive action), we derive target price per share of approximately $1.40 and $2.60 for 2008 and 2009, respectively. We believe that Left Behind Games will experience a more rapid growth rate both in terms of revenue and net income than Electronic Arts or Activision in the near and longer term. The seasonal effect for LFBG is modeled to normalize in 2008, with a disproportionately large part of revenue occurring in the fall (See Financials). There is expected to be sequential revenue growth. For the quarter ending 3/31/07, the Company maintains and is growing outstanding distribution through major retailers in the United States. Even after the incidents of November 2006 that gathered media attention by religious and ethic groups, the distribution network is growing, and currently more than 10,000 retail locations already or are expected to carry LEFT BEHIND: Eternal Forces, including Wal-Mart, Best Buy, Target, Circuit City, GameStop, EB Games, EB Canada, CompUSA, Amazon.com, and numerous others. Additionally, inspirational bookstores are distributing it. LFBG is offering a quality game for the retail price of $19.95 to $29.95."
To receive a complimentary copy of the RedChip Visibility research update on LFBG, please visit: http://www.redchip.com/visibility/about.asp?page=requestLFBG_update
About RedChip Visibility
RedChip Research, a division of RedChip Companies Inc., writes fundamental research on small-cap companies. RedChip's success has been documented in Forbes, Barron's and the Wall Street Journal. RedChip Visibility provides small-cap companies access to both professional and individual small-cap investors by holding conferences throughout the United States, producing online corporate visibility programs, and writing company sponsored research.
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RedChip Visibility Research Disclosure
The analysts contributing to this report do not hold any shares of LFBG. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts' personal views as to the subject securities and issuers. RedChip certifies that no part of the analysts' compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. As such, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. In the purview of Section 17(b) of the Securities Act of 1933 and in the interest of full disclosure, we call the reader's attention to the fact that Red Chip visibility, a division of RedChip Companies, has been hired by the Company to distribute its press releases, and write research on the company. RedChip Visibility has received a cash fee of $30,000 for their services.