Lumenpulse may soon get acquisitive, says Euro Pacific

A solid Q2 may embolden Lumenpulse (Lumenpulse Stock Quote, Chart, News: TSX:LMP) to make an acquisition in the second half of its fiscal year, says Euro Pacific Canada analyst Andrej Krneta.

Yesterday, recent IPO Lumenpulse reported its Q2, 2015 results. The company earned $400,000 on revenue of $25.6-million, up 68% over last year’s Q2 topline.

“The solid consolidated revenue growth achieved in the first half of 2015 is a clear indication of our ability to execute our strategy on a global scale and continue to deliver above-industry growth,” said CEO Francois-Xavier Souvay. “Our objectives remain to continue growing Lumenpulse’s business at a growth rate exceeding the growth rate in the general lighting market for LED products and, over time, converging toward market growth, and to reach adjusted gross profit margin approaching 50 per cent and Adjusted EBITDA margin of approximately 18 per cent to 20 per cent within the next five years.”

Krneta says Lumenpulse’s Q2 results were “encouraging” and believes they were the result of better execution from management. He thinnks the company will build momentum in the second half of fiscal 2015, and that this will increase the company’s focus on potential M&A targets.

The analyst also noted that the $6.5-million in revenue the company derived from Projection Lighting exceeded his expectation of $5.6-million.

“With Projection Lighting (PL) emerging as a solid contributor in the quarter, we see LMP emboldened to the make further acquisitions and accelerate the ongoing cash generation ramp,” said Krneta.

In a research update to clients this morning, Krneta maintained his “Buy” rating and $20.00 one-year target on Lumenpulse, implying a return of 21.3% at the time of publication.