Apivio Systems (Apivio Systems Stock Quote, Chart, News: TSXV:APV) has demonstrated success as a VOIP provider in South Korea, but a new Android-based enterprise phone that will target the North American market could be a “game changer” says PI analyst Pardeep Sangha.
In a research report to clients Thursday, Sangha initiated coverage of Apivio with a “Buy” rating and a one-year target of $1.00.
Sangha notes that Apivio has spent much of the past year developing a relationship with NEC Corporation, and the pair have developed a new phone that will begin to roll out in the United States in April. The product combines features of a desktop enterprise phone with the features of an Android-based smartphone.
The new aspects of Apivio’s gameplan, points out Sangha, will complement a business that is growing. He notes that the company equaled its entire 2013 topline in the first nine months of fiscal 2014. He is forecasting that Apivio’s revenue will grow 32% to $46.1-million in 2014, and another 12% the following year, to $51.5-million.
Sangha explains that because Apivio has been reinvesting its profits of late he is forecasting EBITDA of just $400,000 in fiscal 2014. However, he expects that adjusted EBITDA will grow to $3-million in fiscal 2016, which would be a 5% adjusted EBITDA margin.
“Longer term,” says Sangha, “we believe Apivio has the potential to become a Company with $100M in revenue generating 10% EBITDA margins. We believe Apivio could be a future target for acquisition by a larger telecom hardware or VoIP equipment vendor.”
Shares of APV closed Friday at $0.38.