There’s big upside in Axia Netmedia, says Cantor’s Abernethy

2013 may prove to be a “transformative” year for Axia Netmedia (Axia Netmedia Stock Quote, Chart, News: TSX:AXX) says Cantor Fitzgerald analyst Blair Abernethy.

Yesterday, Axia Netmedia reported its fiscal 2013 results. The company earned $1.9-million on revenue of $110-million, up 17% from 2012’s topline.

Shares of Axia Netmedia have nearly doubled since last May, but Abernethy says there are a number of things that can continue to drive growth for the company. He cites the successful sale of two assets, the November sale of its 70% interest in OpenNet and the sale of its stake in Xarxa Oberta two months earlier, new organic growth initiatives, and the decision to launch a dividend among them.

Calgary-based Axia designs and builds fibre based internet and data networks, often to remote communities. The company’s operations largely take place in North America and in France, where its subsidiary Covage is partnered with the locally owned and operated VINCI Networks.

Abernethy says Axia is beginning to see health recurring revenue rates in both France and North America and he believes penetration rates in both areas will continue to increase.

In a research update to clients yesterday, Abernethy maintained his BUY rating and $4.50 one-year target on Axia Netmedia, implying 78% upside over yesterday’s closing price of $2.59. The Cantor Fitzgerald Canada analyst says his valuations is a sum-of-the-parts assessment, ascribing a $2.75 value to the company’s North American unit and $1.75 to its French unit.

Shares of AXX closed today down 1.5% to $2.55.

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