Dolby Laboratories Inc., the inventor of audio technologies such as surround sound, rose the most in two months after a report from Brigantine Advisors LLC said the stock is undervalued.
Dolby rose 6.5 percent to close at $37.19, its biggest one-day increase since Nov. 18.
San Francisco-based Dolby reports first-quarter earnings next week. The stock has gained 22 percent this year and has closed higher for the past five days.
Barbara Coffey, a New York-based analyst with Brigantine Advisors LLC, raised her price target for Dolby to $40 from $32 last week, saying the shares are worth more than current levels. The company is trying to shift its business as consumers shed DVDs and PCs in favor of media on mobile phones and tablet computers.
“We believe that even though 2012 will be a transition year for Dolby, shares are undervalued at these levels,” Coffey wrote in a note to clients on Jan. 20.
Dolby fell 54 percent last year, as licensing to computer makers declined to 30 percent of total revenue from 36 percent in 2010 and the company’s technology is unlikely to be included in Microsoft Corp.’s Windows 8, after inclusion in earlier versions, Coffey said.
“The industry we serve is at an inflection point,” Kevin Yeaman, Dolby’s chief executive officer said during a Nov. 17 earnings call. “We are seeing a shift in our core audio business from optical disc playback to digital broadcast and E-Media content.”
Dolby will report its fiscal first-quarter earnings on Jan. 31. In November, the company forecast fiscal 2012 annual revenue of as much as $970 million, missing the consensus analysts’ estimate at the time of $983.1 million. Last year, revenue gained 3.6 percent to $955.5 million.
Josh Gershman, a spokesman for Dolby, declined to comment.