Mackie Research launches coverage of GuestLogix with a $2.10 target

In a report to clients this morning, Thadani initiated coverage of GuestLogix with a “Speculative Buy” rating and a one-year target of $2.10, implying a 67% return at the time of publication.

Thadani says GuestLogix has more focus now because its strategic review led the company to concentrate on its core transaction processing software and nix any R&D activity that had unclear revenue visibility. He says this means 2015 will be an “inflection year as GuestLogix transitions to a software driven revenue model through 2014.”

The Mackie Research analyst believes there are several potential catalysts on the horizon for GuestLogix. Among these are the possibility that major airlines could enable payment processing via seatback screens or passenger devices later this year, the very real possibility that new data will underscore the value of GuestLogix’s next-gen monetization strategies, and additional deployments and revenue streams.

Thadani says that despite the company’s preference for organic growth, he would not rule out the possibility of M&A activity. He also believes the company will become “increasingly attractive” to larger players, and could itself become a takeout target.

As for valuation, Thadani says his $2.10 target represents about 15x his expectation for GuestLogix’s 2015 EBITDA. He thinks upside could come from better than expected channel partner revenue.

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