Its macro environment has provided a strong tailwind, but Avigilon (TSX:AVO) has executed flawlessly on the opportunities presented to it and therefore deserves a healthy valuation, says Cantor Fitzgerald analyst Justin Kew.
After reporting a Q3 that easily bested consensus expectations, Avigilon was cheered by a round of upgrades on Bay Street. This morning, in a research update to clients, Kew maintained his BUY recommendation on Avigilon, but raised his one-year target price to $38.00, up fifteen dollars from his previous $25.00 target. His target price matches the street high.
On November 5th, Avigilon announced it had earned $0.23 a share in its third-quarter on revenue of $51.1-million, up 101% over the same period a year prior. The street had been expecting earnings of $0.05 on $40.4-million in revenue.
Kew says management’s stated goal of reaching $500-million in revenue by the end of 2016 now appears perfectly within reach. He says the company’s go-to market strategy has been to leverage a rapidly growing integrator network that now numbers more than 1600. The company’s internal sales team, which is tasked with building and maintaining this network, has really just begun to leverage its power, he says, but “has been extremely successful in cost-effectively growing revenue in a number of geographies simultaneously.”
Kew, who recently met with Avigilon management, says they reiterated their plan for growth, which is to expand on multiple geographical fronts, build brand awareness and continue to strengthen its product development with innovative new products and feature improvements.
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