Some investors may be disappointed that Guestlogix’s (TSX:GXI) strategic review has ended without a deal to sell of the company, but they shouldn’t be, says M Partners analyst Ron Shuttleworth.
On Monday morning, Guestlogix issued a press release announcing that the strategic review the company initiated on October 9th had concluded without a deal.
CEO Brett Proud said the value of Guestlogix had risen during the process.
“Throughout the strategic review process, the company executed well on its organic growth strategy and secured significant signings that dramatically improved both the short- and long-term outlook of the company,” he said.
Shuttleworth says shares of Guestlogix began to fall in May, action he suspects was the result of certain shareholders bailing as rumours that no deal would happen swirled.
But the M Partners analysts notes that since October, Guestlogix has booked new deals with Panasonic Avionics and Thales and renewed key customers including Germania and Cathay Pacific.
These executional milestones, says Shuttleworth, prompted him to increase his fiscal 2013 EBITDA outlook to $3.4-million, and then to $5.6M earlier this spring, resulting in an increased target of $1.35
Shuttleworth says an offer from a strategic buyer likely would have come in at between $1.30 and $1.50 per share for the company, which would put a buyout in range of his fundamental target. He says the recent selloff provides a good entry point for shareholders who believe the fundamentals of the company are solid. In a research update to clients this morning, Shuttleworth reiterated his BUY recommendation and 12-month share price target of $1.35.