PI analyst Sangha raises target on TIO Networks to $0.85

PI analyst Pardeep Sangha says the acquisition of walk-up bill payment processor Globex will diversify TIO Networks’ revenue stream. TIO Networks’ (TSXV:TNC) forthcoming acquisition of walk-up bill payment processor Globex will pace 20% revenue growth in fiscal 2015, says PI analyst Pardeep Sangha.

On Friday, TIO reported its Q4 and fiscal 2013 numbers. For the year, the company lost $721,993 on revenue of $40.45-million, down from a topline of $42.24-million in 2012.

Sangha says that TIO’s bottom line was affected by one time costs related to the Globex acquisition, noting the company incurred $323,000 in such costs in its fourth quarter alone. He says revenue came in lower largely because the company’s largest customer, Cricket Wireless, experienced a decline in its own subscriber base.

Sangha says the company’s experience with Cricket is exactly why he likes TIO’s acquisition of Globex. He believes that not only will Globex bring diversity to TIO’s revenue stream, it will bring higher margins.

The PI analyst says he expects that TIO will complete the Globex acquisition early next year, and the pickup will help pace the company to 10% revenue growth in fiscal 2014. This topline estimate is lower than his previous expectation of $50.5-million, he says, because the acquisition is set to close much later than he expected. By fiscal 2015, Sangha expects TIO will hit its stride, posting EBITDA of $7.2-million on revenue of $53.7-million.

In a research update to clients this morning, Sangha maintained his BUY rating on TIO Networks, but raised his target price from $0.60 to $0.85. Shares of the company closed today down 2.4% to $.41.

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