Better capitalized competitors are aiming straight for Absolute Software’s (TSX:ABT) sweet spot but the Vancouver-based company is still well positioned, says Cantor Fitzgerald Canada analyst Blair Abernethy.
On Monday, Google announced that it had acquired Mobile Device Management solution player Divide, a company that had raised in excess of $25-million, some of it from Google Ventures. Abernethy says Divide’s target market “…appears to have direct overlap with Absolute’s mobile device management solution in several areas”.
What’s more, Absolute competitor Good Technology last week filed IPO papers that revealed its 2013 revenue had grown by 38% to $160-million.
The Cantor Fitzgerald Canada analyst says he sees Google’s actions as “an incremental negative” for Absolute. He says the company must now get its integrated product offering to market as quickly as it can so it can retain its core base in the education market and continue to grow its business.
In a research update to clients Tuesday, Abernethy maintained his “Buy” rating and $11.00 one-year target on Absolute Software. He says his target implies a multiple of 25.2x his estimate of the company’s 2015 earnings price-to-free cash flow, noting that the company’s comparables are north of the 20x mark.
At press time, shares of Absolute Software were down 2.8% to $5.92.