Avigilon is on track to achieve its lofty goals, says Cantor Fitzgerald

Another successful quarter from Avigilon (TSX:AVO) has the company on track to achieve its stated goal of a $500-million run-rate by 2016, says Cantor Fitzgerald Canada analyst Justin Kew.

Yesterday, Avigilon reported its Q2, 2014 results. The company earned $2.8-million on revenue of $65.2-million, up 66% over last year’s second quarter topline of $39.2-million.

CEO Alexander Fernandes reiterated the target once again with the results.

“It was another quarter of profitable growth for Avigilon, highlighted by record revenue and increased EBITDA, while we made significant investments for future growth,” he said. “At our current annualized run rate, we are more than halfway to our target of $500-million by the end of 2016. To achieve this target, we are continuing our successful strategy of expanding our sales team, enhancing marketing and brand awareness, and increasing research and development activities. With a view to augmenting our organic growth, we continue to evaluate acquisitions of complementary technologies in the security space.”

Kew says Avigilon management is succeeding at the tricky balancing act of scaling its business while lowering operating costs as a percentage of overall revenue. He says he expects revenue growth will continue because the company has allocated sufficient resources to its sales and marketing efforts. He notes that revenue growth was strong across all geographies, particularly in the United States and Asia Pacific, which saw growth of 93% and 123%, respectively. Kew says year-over-year inventory growth of 118% is one indication that revenue will continue to climb in the quarters to come.

In a research update to clients today, Kew maintained his “Buy” recommendation on Avigilon, but increased his one-year price target to $34 from $32, implying a 37% return at the time of publication.