Baylin Technologies’ (TSX:BYL) “disappointing” fourth quarter results will soon be forgotten, says Paradigm Capital analyst Daniel Kim.
On Friday, Baylin reported its fourth quarter and fiscal 2014 results. In Q4, the company lost $4.9-million on revenue of $9.44-million.
“In fiscal 2014, we saw our infrastructure and broadband product line sales track ahead of our expectations, which helped partially offset the expected reduction in sales across our mobile product line,” said CEO Ephraim Ulmer. “Our innovative infrastructure products continue to be installed in a number of prestigious venues. Our broadband product line is performing well, and we are currently working on a large project for a Tier 1 North American telecom provider,” adding: “We expect that we will see bottom line improvements and growth across all three of our product lines in 2015.”
Kim notes that the quarter fell below his expectations of a $1-million loss on revenue of $15-million, and the street’s loftier projection of a $500k loss on a $20-million topline. But Kim says he sees catalysts such as the company’s renewed relationship with Samsung as spurring a better outlook.
“Despite the disappointing results, we look to 2015/2016 and see growth across the board,” he said. “The bulk of the current volatility is being caused by Mobile from the S5 platform, but the S6 will deliver significantly improved revenue contribution. Our thesis is unchanged: The current value of the shares is more than justified by the Infrastructure and Broadband divisions, effectively receiving Mobile for free.”
In a research update to clients today, Kim reiterated his “Buy” recommendation and $7.00 one year target on Baylin, implying a return of 82% at the time of publication.