D-BOX Technologies (TSX:DBO) has reached a “significant” inflection point, and is extremely undervalued, says Industrial Alliance Securities analyst Steve Li.
On November 14th, D-BOX reported its Q2, 2013 results. The company lost $675,000 on revenue of $4.5-million. CEO Claude McMaster was upbeat.
“Our most recent financial demonstrate once again the soundness of our growth strategy in both the industrial and entertainment markets,” he said. “I am convinced that this strategy will have positive effects at every level.”
Li, noting that D-BOX’s Q2 topline surpassed his expectations of $4.0-million, says the company is on the cusp of a significant opportunity presented primarily by its burgeoning relationship with Cinemark. Since late June, notes the Industrial Alliance Securities analyst, D-BOX has installed or received orders its MFX systems, which enable motion seats to be synced to action on a theatre screen, for 29 new screens, six of which are from Cinemark.
Li says investors should keep a close eye on the D-BOX’s relationship with the theatre giant, because with more than 5300 screens worldwide the addition of this customer represents a “significant opportunity”. Much of this growth, notes Li, will likely be on the international front, as the United States represents just one-third of global screens.
The company’s third quarter may contain several catalysts, he says, because many of the year’s most anticipated movies, including Gravity, Thor: The Dark World, The Hunger Games 2: Catching Fire and The Hobbit: The Desolation of Smaug, will be released in this period.
In a research update to clients following the Q2 results, Li reiterated his SPECULATIVE BUY rating and twelve-month target price of $1.00, implying a return of 355% at current prices.