Absolute Software (TSX:ABT) has an mixed record on execution, says Cormark analyst Richard Tse, but this is likely to be trumped by the sheer number of “irons in the fire” the company currently has.
In a research update to clients this morning, Tse upgraded Absolute from “Market Perform” to “Buy” an raised his target on the stock from $7.50 to $8.50.
Tse, who recently met with Absolute Software’s management, says he has been slowly moving toward a more bullish stance on the stock. He reminds that he took a similar stance in 2012, only to be disappointed by a rapidly declining market for PCs.
But Tse’s optimism now, he says, is supported by numerous material the company has made in the time since. The company, he notes, has undertaken a reorganization of its sales force, including am improved compensation plan. The Cormark analyst also points out that the company has increased its global partnerships and emphasized a push towards Value Added Reseller Agreements and away from direct sales.
Tse believes that Absolute’s revenue will grow from $83.17-million in fiscal 2013 to $91.28-million the following year, and then to $100.29-million by fiscal 2015.
Another potential driver for Absolute, says Tse, is that the company is entering a period of contract renewals over the next twelve months, with about 20% of existing subscriber base. He says this could potentially drive sales contracts higher than his current 2014 estimate.
Shares of Absolute Software closed today up .6% to $6.90.