Industrial Alliance raises target on Alarmforce to $14

Industrial Alliance Securities analyst Steve Li says he is encouraged by cost controls that have led to increased profitability for Alarmforce (TSX:AF).

On Tuesday Alarmforce reported its fourth quarter and fiscal 2013 results. In the fourth quarter, the company posted earnings of $2.7-million, or $0.22 per share on revenue of $12.6-million. Li had been expecting the company would earn $1.4-million, or $0.12 a share.

Anthony Pizzonia, who took on the role of interim president and CEO after founder Joel Matlin was ousted last July, outlined the company’s strategy going forward.

“We expect to continue the momentum from the fourth quarter by leveraging our competitive strengths and value proposition to drive organic subscriber growth. We expect to grow our average revenue per subscriber as the market continues to adopt home automation technologies. We will be effectively deploying capital to deliver shareholder value by focusing on our service offering over the subscriber life cycle to lengthen the time we retain our customers.”

Li notes that Alarmforce’s bottom line was impacted positively by lower marketing expenditures, parts and manufacturing reductions, and a staff reorganization. Despite this, he points out that the company continues to innovate; Alarmforce is expected to soon unveil a new panel that will allow subscribers to arm or disarm their security system via email.

In a research update to clients this morning, Li maintained his STRONG BUY rating, but raised his target on the stock to $14.00, up from his previous target of $12.75.

______________________________________________________________________________________________________________