Absolute Software still a likely buyout candidate, says Paradigm

New Absolute Software (Absolute Software Stock Quote, Chart, News: TSX:ABT) CEO Geoff Haydon hasn’t had much time at the helm of the Vancouver-based company, but early returns suggest he is already making progress, says Paradigm Capital analyst Gabriel Leung.

Yesterday, Absolute Software reported its Q1, 2015 results. The company earned (US) $305,169 on total sales contracts of $26.1-million, a 10% bump over last year’s first quarter topline.

“Operationally, we’re executing on our committed fiscal 2015 course of action and tightening our focus throughout the business,” said CEO Haydon. “We have narrowed our sights on select industry vertical markets and geographic regions. As part of this focus, we will be launching an initiative to drive increased awareness in those chosen target verticals. Within our sales organization, we have taken steps to focus incentives and align our structure to unlock further potential and to drive more productive new business development. Looking forward, we believe we are on track to achieve our financial and operational goals for fiscal 2015.”

Leung says that while it is still early days, Haydon seems to making progress in the above areas. He says the company’s booking were in line with his expectations, but that its cash flow per share of $0.20 bested his estimate of $0.16.

In a research update to clients this morning, Leung maintained his “Buy” rating and one-year target of $10.00 on Absolute Software, implying a return of 43% at the time of publication. The analyst says his thesis on Absolute Software “…is largely predicated on our view of the company’s status as a high probability takeout target, particularly given Crescendo Partners election to the Board”.

Shares of ABT closed today up 1% to $7.08.