Byron Capital analyst Dev Bhangui says Redline is a “Strong Buy”
The selloff in Redline Communications (TSX:RDL) is overdone, says Byron Capital analyst Dev Bhangui.
In mid-August, Redline reported its Q2, 2013 results. The company lost (U.S.) $533,889 on revenue of $8.9-million.The topline number fell below the street consensus was for $11.4 million.
in the days following the numbers, shares of Redline sold off, falling as low as $4.90 after hitting midsummer highs above $6.00.
Bhangui says the recent low prices ought to be a wake-up call for investors, who should remember that the larger picture on Redline is that this is a company in the middle of a rise the Byron analyst expects will be steep and sustained. He thinks the second half of fiscal 2013 will be particularly strong for Redline, and that the revenue deferral that characterized the first half of the year will be reversed.
In a research update to clients, Bhangui reiterated his STRONG BUY rating and $7.50 one-year target on Redline Communications.
Bhangui says as a supplier of wireless equipment to the oil and gas industry, Redline now positively dominates it chosen niche. He says the company is on the cusp of rolling out lucrative solutions with major oil and gas providers such as Occidental, BP and Chevron, but is not being rewarded for its leadership position.
He notes that despite margin and revenue growth that is far outpacing its comparables in the machine-to-machine space, Redline is currently trading at 1.4x estimates of its 2014 revenue, vs. peers that are trading at 1.8x. He says this represents a “compelling” buying opportunity.
At Cantech Letter we prize independent journalism like you do. And we don't care for paywalls and popups and all that noise That's why we need your support. If you value getting your daily information from the experts, won't you help us? No donation is too small.
Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
Following the company's fourth quarter results, Eight Capital analyst Kiran Sritharan has maintained his "Buy" rating on Sabio Holdings (Sabio… [Read More]
Following the company's first quarter results, Desjardins analyst Benoit Poirier has raised his price target on Bombardier (Bombardier Stock Quote,… [Read More]
Following fourth quarter results he describes as "stronger than expected", Beacon Securities analyst Russell Stanley has raised his price target… [Read More]