Ahead of Q2 numbers, Cantor Fitzgerald says Buy Absolute Software

Tomorrow, after market close, Absolute Software (TSX:ABT) will report its Q2, 2013 results. Shareholders are hoping the company improves on a Q1 in which the Vancouver-based company earned (US) $470,768 on sales contracts that totaled $20.6-million, which was a 19% dip from the first quarter of fiscal 2012.

Cantor Fitzgerald analyst Tom Liston says shareholders can take solace in the fact that the past two months have seen two major developments. In early January, the company closed the largest deal in its history; a Fortune 100 customer in the healthcare vertical signed on for a contract worth $3.5-million.

Weeks earlier, shareholders voted two Crescendo Partners representatives to its board of directors. Liston says this bodes well for a potential acquisition, because activist investor Crescendo has represented on Canadian tech boards for an average of 2.2 years before those companies have been acquired, and the average absolute return has been 62% with an average annualized return of 90%. In a research update to clients this morning, Liston maintained his BUY recommendation and $6.50 twelve-month target on the stock.

Absolute Software sprung to attention midway through the last decade. In 2005, the company teamed up with Lojack to introduce Lojack for Laptops. The product, which worked by periodically dialing Absolute servers and could not be disabled even by wiping the hard drive, was a new level of security for laptops which were, increasingly, becoming a target for thieves.

The success of Lojack for Laptops was a boon to Absolute Software. The company’s revenue climbed from under $37 million in 2007 to more than $74-million in fiscal 2012. Along the way, Absolute made OEM deals with Acer, Dell, Fujitsu, Samsung, Toshiba, Intel and HP. Today, the bulk of the money the company makes is through these deals.

Shares of Absolute Software closed today up .2% to $5.39.

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