Avante Logixx has triple-digit upside, says Paradigm Capital

Paradigm Capital analyst Spencer Churchill says the acquisition of Into-Electronics brings expertise in commercial security to Avante Logixx.
The continued reaction to soft Q1 results is overshadowing a very sensible kickoff to Avante Logixx’s (TSX:XX) M&A efforts, says Paradigm Capital analyst Spencer Churchill.

In late July, Avante Logixx reported its Q1, 2015 results. The company earned $208,055 on revenue of $2,026,260, down 12.8% from the Q1, 2014′s topline. More recently, it closed the $3.6-million acquisition of Toronto-based security player Into-Electronics.

Churchill says he likes the acquisition because the potential for revenue growth and for cost synergies is high due to the fact that the two companies have worked together previously. He notes that the deal, which is accretive to earnings, brings expertise in commercial security to Avante Logixx.

The Paradigm analyst says Avante Logixx’s foray into the smart meter business was ill-timed, but the company has recovered and returned to profitability. He believes that with $6.9-million in the bank, it now has the ability to add upside from M&A to the mix. He believes the company will complete at least two more deals in the next 12-18 months.

Churchill believes the market has not sufficiently rewarded Avante Logixx for the Into-Electronics acquisition, and thinks investors should use the current weakness in the stock as a buying opportunity.

In a research update to clients yesterday, Churchill maintained his “Buy” rating and $0.65 one-year target, implying a return of 132% at the time of publication.