TECSYS’s (TSX:TCS) recent upward revenue trend is sustainable as the company continues to build its success in the healthcare vertical, says Cantor Fitzgerald Canada analyst Justin Kew.
On Tuesday, TECSYS reported its Q2, 2015 results. The company earned $410,000 on revenue of $13.5-million, a 16% topline bump over the $11.7-million in revenue the company reported in same period last year.
“Signing one of North America’s largest integrated delivery networks was a notable achievement for us this quarter, and demonstrates the growing acceptance of our solutions and recognition of its quick return on income,” said CEO Peter Brereton. “We are now focused on integrating Logi-D’s sales and marketing teams, and have been actively introducing these new products to our existing and potential customers. Feedback has been positive, and we continue to advance a number of opportunities which leverage our expanded product and client portfolio to accelerate growth.”
Kew says TECSYS’s “solid” second quarter was in-line with his expectations. He notes that management thinks it is on track to add two integrated delivery network deals (IDNs) each quarter for the rest of the year. This, he says, would put the company’s numbers at the top end of his forecast. The analyst points out that each IDN win adds $1.3-million in the first year and grows to more than $4-million.
“The long term revenue trend has historically been range-bound between $35 million and $43 million between F08 and F13,” says Kew. “However, we believe the recent upward revenue trend is sustainable as management continues to build its success in the healthcare vertical.”
In a research update to clients yesterday, Kew maintained his “Buy” rating on TECSYS, but raised his one-year price target on the stock from $9.00 to $9.50.