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The digital technology services company reported Wednesday first-quarter net income of $988,000, or 4 cents a share, down from year-earlier net income of $12.7 million, or 45 cents.
"Versus peers, we see DGIT shares trading at 4x-6x EBITDA, or $7-$17," Oppenheimer analysts wrote in a report Thursday. "Currently, we cannot justify a long-term fundamental thesis; however, the company might be attractive to a PE firm given its cash flow characteristics and strong industry position."
Shares of Digital Generation hit a 52-week low of $8.66 on Thursday. The stock's 52-week high of $36.67 was set one year ago.
Digital Generation trades at an estimated price-to-earnings ratio for next year of 5.21 times; the average for broadcast and entertainment companies is 13.47.
Five of the nine analysts who cover Digital Generation rated it buy. Three analysts gave the stock a hold rating and one rated it sell.
The stock has fallen 27.85% year to date.