TIO Networks is worth nearly twice its current price, says PI

PI analyst Pardeep Sangha says TIO Networks’ (TSXV:TNC) recent acquisition of bill payment processor Globex is already paying off.

Last Thursday, TIO released its Q2, 2014 results. The company lost $172,744 on revenue of $9.98-million, a topline that was up down slightly from the $10.16-million in revenue it posted in the same period last year, but was up 21% over its Q1, 2014.

CEO Hamed Shahbazi talked about how Globex has scaled up his Vancouver-based company.

“We are very excited about the return to growth in our core business and the successful completion of our accretive acquisition of Globex,” he said. “With over 3,000 retail locations in the U.S processing millions of walk-up payment transactions every month, Globex has significantly increased our size and scale. We are encouraged about our prospects for further growth in the coming quarters as we leverage the combined geographic, customer and product strengths of Tio and Globex.”

Sangha says the results from the Globex acquisition are even better than he expected. He says the pickup has already diversified TIO’s customer base and has boosted its margins and profitability. Sangha is forecasting 11% growth in TIO’s revenue to $44.9-million this fiscal year, and he thinks the company will generate adjusted EBITDA of $2.5-million from that. In 2015, the PI analyst thinks TIO will generate EBITDA of $5.9-million on revenue of $57.4-million.

In a research update to clients Friday, Sangha maintained his “Buy” recommendation on TIO Networks, but raised his one-year target price by fifteen cents, from $0.85 to $1.00. Shares of the company closed Friday up 7.3% to $0.59.

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