Industrial Alliance raises target on Softchoice to $19

Softchoice (TSX:SO) last week reported its Q4 and fiscal 2012 results.

The company’s Q4 revenue was up 15% to (US) $308.7-million, and the company’s net income rose to (US) $8.4-million, up from $6.5-million for the same period a year prior.

CEO David MacDonald said the company is increasing its earnings power.

“Our focus on delivering high-value solutions and services to our clients and expanding our reach within the small- and medium-size business segment resulted in strong net income growth in the quarter,” he said. “Moreover, the solid growth in EBITDA reflects the leverage our operating model is delivering to our business as we benefit from the integration of Unis Lumin, major upgrades to our internal CRM system and strong execution on the part of our field sales organization.”

Industrial Alliance Securities analyst Al Nagaraj says the IT marketplace is experiencing several drivers of growth that ultimately converge upon Softchoice. He says the boom in cloud computing, bring your own device (BYOD) trend, mobility, and services will benefit Softchoice, which is vendor agnostic. Based on this improved outlook, Nagaraj this morning increased his fiscal 2013 earnings estimate on Softchoice from $1.52 to $1.70. As a result, the Industrial Alliance analyst maintained his BUY recommendation and increased his price target on the company’s stock to $19, up $3.50 from his previous target of $15.50.

Softchoice, which was founded in 1989, boasts more than 14,000 small and medium-sized business, enterprise and public sector customers across Canada and the United States. CEO MacDonald, who joined the company in 2001 after an eighteen year career at Xerox, helped transform the company from a software direct marketer to one of North America’s largest providers of technology solutions and services.

Shares of Softchoice closed today up 2.2% to $15.33.

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