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Mitel’s leverage is improving, says Cormark

Yesterday, in conjunction with ongoing discussions with potential lenders for refinancing of its existing senior secured credit facilities, Mitel Networks(TSX:MNW) released preliminary Q3 results. The company confirmed that its revenue will be approximately $142-million, and that operating expenses for the quarter are expected to be 42% to 43% of revenue.

Cormark analyst Richard Tse says Mitel is continuing to build leverage in its operating model, and that its margins should begin to improve as a result. He thinks the risk to reward profile is improving for the company. In a research update to clients this morning, Tse upped his fiscal 2013 earnings estimate on Mitel from $0.74 to $0.78 and reiterated his BUY rating and $5 target on Mitel’s stock.

In December, Mitel reported Q2, 2013 results that bested the street’s expectations. The company’s topline of $145.5-million also beat its own guidance of between $140 and $145-million. The street consensus was $142.5-million.

That quarter represented a rebound for the Ottawa-based telco. After returning to Canada with a TSX listing midway through last year, the company’s Q1 was a rare recent misstep, forcing it to cut two-hundred jobs and initiate a short-term restructuring.

Shares of Mitel on the TSX closed today up 4.3% to $3.91.

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About The Author /

Nick Waddell
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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