Newly-listed Pivot Technology (TSXV:PTG) is very undervalued, says Global Maxfin analyst Ralph Garcea.
In April, Carlsbad, California-based Pivot, which was founded by former Apple CEO John Sculley in 2010, raised $3.5 million in a private placement, priced at $0.80 per share, changing the name and rolling back the shares of a shell called Acme Capital Corp. Shares of the company have since trickled to lows near the fifteen cent mark.
Garcea says Pivot, which was formed to consolidate the fragmented enterprise IT Value Added Reseller (VAR) channel, is uniquely positioned among U.S.-based VARs to respond to the numerous dynamics affecting the IT supply chain, including consolidation in end user markets, evolution in mobile and enterprise computing, and the advent of the post-PC era.
He says that while the company has some work to do to shore up its balance sheet, it has several unique advantages, including access to supply chain financing capital, a legendary chairman, and proven M&A execution and integration capability. He thinks Pivot can grow it revenue and margins, while being an active acquirer.
In a research report to clients recently, Garcea initiated coverage of Pivot Technology with a STRONG BUY recommendation and a 12-month price target of C$1.00 per share, which implies a 545% upside from the current price.
Pivot Technology Solutions is a holding company invested in four portfolio companies that are all VARs in the enterprise IT markets, where they resell storage, hardware, software and services. The company, which now has 670 employees, has more than 2,100 customers, and generates 70% of its revenue from Fortune 100 companies.
Shares of Pivot Technology closed today even at $0.145.