Cantor Fitzgerald analyst Justin Kew says the recent financial results of Sweden’s Axis Communications are a solid indicator of the financial health of Avigilon’s space. The recent results of one of Avigilon’s (TSX:AVO) peers bodes well for the Vancouver-based company’s upcoming Q3 results, says Cantor Fitzgerald analyst Justin Kew.

Tomorrow, after market close, Avigilon will report its third quarter numbers. The company is following on a Q2 in which it earned $3.4 million on revenue of $39.2-million, a topline that was up 61% over last year’s second quarter.

Kew says Sweden’s Axis Communications, a pure-play, publicly-traded comparable to Avigilon, released Q3 results in October that were solid, and he believes this is a good indicator of the health of the network video space in general, although Axis does not provide a comprehensive video management software solution the way Avigilon does.

The Cantor Fitzgerald analyst says he expects Avigilon will generate GAAP EPS of $0.08 per share on revenue of $41-million in its Q3, higher than the street’s expectation of $0.05 on $40.4-million in revenue.

Kew thinks Avigilon will become more profitable in fiscal 2013 and 2014 as it lowers operating expenses as a percentage of revenue. But he says the focus is still on the topline, where he expects the company will hit $160-million in 2013 and $250-million in 2014.

In a research update to clients this morning, Kew reiterated his BUY recommendation and $21 target price on Avigilon. His target, he says, is based on 20x his forecast for fiscal 2014’s EV/EBIITDA, a number he believes is justified by the company”s “extraordinary historic and forecast
revenue and EBITDA growth.”

Shares of Avigilon closed today up 5% to $20.95.