With 75% of the TSX 100 companies already signed on as clients, PI analyst Pardeep Sangha expects the bulk of Solium Capital’s (TSX:SUM) growth will come from the U.S. and international markets, where there is clearly long term opportunity.
In a research update to clients this morning, Sangha maintained his BUY rating on Solium Capital, but raised his price target to $8.25, up from his previous target of $7.50.
Sangha’s report this morning included his forecast for Solium’s fiscal 2015 for the first time. He expects the company can continue strong double digit growth, even if he does not include any acquisitions, which is a possibility given the fact that Solium has just shored up its balance sheet with a $23-million financing.
Calgary-based Solium Capital, which was founded in 1999, helps companies sort through the regulatory tangle that is equity-based compensation. This type of remuneration, which 97% of companies offer their employees, is extremely complex because of changing regulatory environments, employee churn and localized rules. Until last year, Solium concentrated largely on the Canadian market, but has recently scaled up to capitalize on opportunities in the U.S. and U.K.
The PI analyst is forecasting 35% revenue growth for the current fiscal 2013, 16% for 2014, and a further 13% gain in fiscal 2015 to bring that year’s revenue to $88.8-million. He expects EBITDA to climb from $17.4-million in fiscal 2013 to $20.2-million the following year and $23-million in 2015.
Sangha says is expects Solium’s organic growth to be in the 7-9% range, annually, and additional growth will come from acquisitions, geographic expansion, new products and its entry into the private company market.