Apivio still has triple digit upside, says PI

Apivio Systems (Apivio Stock Quote, Chart, News: TSX:APV) has had a strong start to 2015, but there’s lots of upside left in the stock, says PI analyst Pardeep Sangha.

Last Friday, Apivio reported its Q1, 2015 results. The company lost $193,276 on revenue of $11.6-million, a topline that was up 24.4% over the same period last year.

“Our focus in Q1 2015 was to manufacture and ship the first batch of UT880 phones to NEC, (and to) continue the development of our L2 series of Liberty Wi-Fi phones that will be automatically provisioned over our cloud-based provisioning system, (and) invest heavily in R&D to develop the next generation of products and their extensions for the North American and Korean markets We look forward to communicating on these initiatives as they are ready for market launch,” said Bakshi.

Sangha says that while he has revised his bottom line forecast slightly down he remains bullish on the company’s long term story.

“We are forecasting 12% revenue growth in FY15 to $52.0M with positive Adj. EBITDA of $1.8M (previously $52.0M revenue and $2.6M Adj. EBITDA),” said the analyst. “We decreased our FY15 Adj. EBITDA forecast as a result of higher R&D expenses due to the L2 Wi-Fi phone development and the hiring of a new applications development team for the NEC Android platform. Our FY15 forecast is based on Korean market revenue of $48.2M, plus $3.0M in sales from the NEC enterprise phone and $0.7M in sales of the L2 Wi-Fi phone. We are expecting Apivio to deliver 15,000 phones to NEC in FY15 and 30,000 phones in FY16. We are forecasting 15% revenue growth in FY16 to $60.0M with Adj. EBITDA of $3.8M (previously revenue of $60.0M and Adj. EBITDA of $4.0M).”

In a research update to clients yesterday, Sangha maintained his “Buy” recommendation and one year target price of $1.15 on Apivio Systems.

At press time, shares of Apivio were up 1.9% to $0.55.

Disclosure: Apivio is an annual sponsor of Cantech Letter.

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