M Partners Maintains HOLD Rating, $.30 cent Target on VIQ Solutions

Yesterday, VIQ Solutions (TSXV:VQS) reported its fiscal 2011 results. Revenue was up 25%, to $15.3-million from 2010’s $12.2-million, representing an increase of 25%. The company’s bottom line improved too, too, turning a $2.58-million loss in 2010 into earnings of $75,094.

M Partners analyst Ron Shuttleworth says VIQ’s year would have been even better if it hadn’t posted a weak Q4. Nonetheless, he believes most of the catalysts he expects to expose real value are merely delayed, not off the table. In a research update today, Shuttleworth reiterated his HOLD rating and twelve-month target of $.30 cents on VIQ Solutions.

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Founded in 2004, Calgary’s VIQ Solutions provides digital audio and video capture that is used mostly in courtrooms around the world. Late in 2010, the company signed a software licensing agreement with Cisco for its Encompass RPC product suite, which will be marketed along with Cisco’s Connected Justice product portfolio. Cisco believes the space will grow because local courts around the world are facing reduced budgets and headcounts, and because the product is often a safer option than in person hearings.

Shuttleworth says he is encouraged by recent deals VIQ has made in Mexico and Botswana and identifies these as “potential lead indicators of a more solid H2’12.” But the M Partners analyst warns the company could be affected because large capital expenditure projects the company has bid on in Africa, which are now being shielded from sovereign debt risk by Chinese investment, would be particularly exposed if the Chinese economy has a “hard landing”.

Shares of VIQ Solutions closed today down 5% to $.19 cents.

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