Ahead of Q2, AlarmForce keeps “Strong Buy” rating at Industrial Alliance

Recent moves to reorganize staff, reduce costs and develop new products should reinvigorate AlarmForce (TSX:AF), says Industrial Alliance analyst Steve Li.

On Thursday, AlarmForce will post its Q2, 2014 numbers. The company is coming off a Q1 in which it earned $2.4-million on revenue of $13-million.

Li says he expects AlarmForce will earn $1.9-million on a topline of $13.4-million, revenue that would represent a 10.7% increase over last year’s second quarter. He thinks the company will do this by adding 6,300 net additional subscribers over last year, 1200 of which will have been added since the first quarter.

The Industrial Alliance analyst says he expects that AlarmForce’s EBITDA will rise 36.8% year-over-year to $4.0-million. But he thinks if the company can get a hold of its “volatile” marketing expenses EBITDA would increase to $7.2-million.

The release of new features, says Li, should attract new subscriber. These include email notifications and remote control to arm or disarm the system.

In a research update to clients yesterday, Li maintained his “Strong Buy” rating and one-year price target of $14.50 on AlarmForce, implying a return of 36.7% at the time of publication.

At press time, shares of AlarmForce were down .5% to $10.60.

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