Espial Group still has upside, says Global Maxfin’s Garcea

Espial CEO Jaison Dolvane says the Ottawa-based company is gaining momentum. Espial Group’s (TSX:ESP) surprise Q4 results aren’t an anomaly, says Global Maxfin analyst Ralph Garcea.

Last Wednesday, after market, Espial released its Q4 and fiscal 2013 results. In the fourth quarter the company earned $100,000, or a penny a share on revenue of $3.9-million. Garcea expected the company would lose three-cents a share on revenue of $3.3-million.

CEO Jaison Dolvane says the Ottawa-based company is gaining momentum.

“We announced a major cable operator win in the fourth quarter of 2013 and continued to grab the attention of some of the world’s largest cable operators with our sales and marketing efforts. Cable operators need open, cloud-based service platforms, using HTML5, to enable rapid service innovation and compete effectively against new, more nimble Internet competitors. As we move into 2014, we do so with a strong product portfolio, continued [research and development] innovation and a solid sales pipeline.”

Garcea says he expects Espial, whose platforms facilitate IPTV video services such as video-on-demand and TV web browsing, will be EBITDA positive from this point forward. He cites growth in all the company’s target markets, increasing brand recognition from major service providers, and increased synergies from last year’s acquisition of U.K.-based IP, hybrid, and connected TV player ANT plc as among the reasons for this.

In a research update to clients Friday, Garcea maintained his STRONG BUY rating on Espial, but increased his one-year target price to $2.00, up fifty cents from his previous $1.50 target.

At press time, shares of Espial were down 4.7% to $1.43.

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