On Thursday, PNI Digital Media (TSX:PN) will report its Q3, 2012 results. Shares of the Vancouver-based company have been falling for the better part of two years, and have not recovered from a steep decline that happened around the time of the worldwide financial crisis of 2008.
M Partners analyst Ron Shuttleworth, however, thinks the stock is oversold, noting that PNI Digital trades at 2.5 times estimated 2013 EBITDA, while its peers trade at an 8.6 multiple. In a research update to clients today, Shuttleworth maintained his BUY rating and $1.25 target price on PNI.
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Vancouver’s PNI Digital Media, which was once known as PhotoChannel, has an international reach. The Company’s PNI Digital Media Platform reaches clients through retail giants such as Walmart, Costco, SAM’s Club, CVS/pharmacy, Tesco, Kodak, ASDA, K-Mart Australia, and Hallmark UK. The company, which graduated to the TSX last October, has spent much of this year playing musical chairs with management, seeing President and COO Aaron Rallo resign last December, followed by CFO Simon Bodymore this past June, and VP Technology Zack Wickes, who resigned in July after just seven months on the job.
Shuttleworth believes that management distraction may be a risk factor, but that this may be mitigated by a Q3 that is typically stronger than Q2 for seasonal reasons, and the fact that this will be the first full quarter contribution from Walgreens, which stuck a deal with PNI last year to allow its customers to create and customize cards and invitations.
Shares of PNI Digital closed today down 6.1% to $.46 cents.