Calgary-based Zedi (TSXV:ZED) has the potential to be a billion dollar company, says Cantor Fitzgerald analyst Peter Prattas.
Last week, Zedi released its Q2, 2013 results. The company generated EBITDA of $3,003,000-million on revenue of $25,974,000, which was down 2% from last year’s Q2.
CEO Matthew Heffernan noted that the results came in the face of once-in-a-century weather events.
“These results demonstrate our ability to continue to grow revenues and deliver profitability without contribution from unusual events,” he said. “One particular area of pride for us is that we were able to deliver uninterrupted call centre service to our customers throughout the flooding in Southern Alberta — a testament to the dedication of our people and the robustness and reliability of our systems.”
Prattas says the results were in line with his expectations. In the larger picture, the Cantor Fitzgerald analyst says Zedi’s value proposition is particularly strong. He says the company dominates the production operations management market in Canada, and the potential of its technology deployed on a worldwide scale is “massive”, and is just beginning.
Prattas says the combination of organic growth and potential for growth through acquisition means Zedi could grow into $1-billion company, if it is not acquired first.
In a research update to clients following the Q2 results, Prattas maintained his BUY rating and $1.20 one-year target price on Zedi. He says the stock is very attractive at its current price because it values the company at just 2.6× EV/EBITDA and a 7.6x P/E against his 2014 forecast, implying a free cash flow yield of 18.4%.
At press time, shares of Zedi were even at $.63.