Symbility Solutions (TSXV:SY) is a a technology disruptor in the global Policy & Claims claims market, and is likely a prime acquisition target in the insurance space, says Cormark analyst Richard Tse.
On Monday, Symbility reported its Q2, 2013 results. The company lost $334,000 on revenue of $6-million, a topline that was up 31% from the same period last year.
Tse says the revenue number beat his expectation of $5.8-million. He notes that despite the big topline jump, the company’s operating costs increased just 6%.
The Cormark analyst says that after its major win in getting the business of number three ranked policy and claims provider Farmers, Symbility is positioned to win three to five mandates from incumbent North American vendors over the next 12-24 months. He says the company’s unique ability to affect cost savings is disruptive an puts it in a strong position to take market share.
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In a research update to clients yesterday, Tse reiterated his BUY rating and $.70 target on Symbility Solutions.
Tse says his biggest concern about Symbility is whether it has enough time to scale its business plan before a potential suitor come knocking. He says the stock is trading at an attractive 2.7x EV/S valuation, and notes that some recent M and A numbers in the space are near 6x EV/Sales. Peer Software-as-a-Service plays, he says are trading at more than double Symbility’s valuation.
At press time, shares of Symbility were even at $.45.