ProntoForms is a potential takeout candidate, says Paradigm analyst Leung

ProntoForms’ (TSXV:PFM) increasing traction in the mobile forms market is impressive and may soon attract a new level of attention, says Paradigm Capital analyst Gabriel Leung.

Last Thursday, ProntoForms reported its Q2, 2014 results. The company lost $176,677 on revenue of $1.59-million, a topline that was up 17% from the same period last year.

CEO Alvaro Pombo explained the longer view of the company’s opportunity.

“Enterprise mobility is reaching a new stage, and organizations are positioning to capitalize on the opportunity,” he said. “Working closely with us, AT&T has recently introduced to the market AT&T Mobile Forms, a new set of private-labelled products based on our proven ProntoForms platform. We are adding to our offering plus increasing our investment in customer revenue acquisition and support of new growth opportunities.”

Leung says the results beat his expectations. He thinks the quarter represents a “positive data point” that reveals the impressive traction the company is gaining in the mobile forms market. He says the company’s strong channel partnerships with the likes of Rogers, Bell and Nextel, plus the current low rate of market adoption mean it has plenty of runway in this “nascent” market, which he thinks means it a natural takeout candidate.

In a research update to clients Friday, Leung maintained his “Buy” rating and $0.70 one-year target on ProntoForms, implying a 56% return at the time of publication.

At press time, shares of ProntoForms were down 4.1% to $0.465.