Espial gets upgraded at Mackie Research Capital

A better than expected first quarter has Mackie Research Capital analyst Nikhil Thadani feeling bullish about Espial Group (Espial Group Stock Quote, Chart, News: TSX:ESP).

Yesterday, Espial reported its Q1, 2015 results. The company earned $359,225 on revenue of $5.4-million.

“Espial had a strong start to 2015, signing two major European cable operator contracts to provide our flagship G4 client software and integration services,” said CEO Jaison Dolvane. “We are seeing growing interest in RDK from the worldwide operator community and continue to strengthen our pipeline. I’m also excited to have Jeff Huppertz join our management team and Mike Hayashi join the Espial board of directors. These are great additions to our team, and I look forward to working together to execute on the opportunity ahead of us.”

Thadani says the results bested his expectations and he says he now sees additional upside in the stock.

“2015 could see ESP win additional contracts as RDK picks up steam. RDK (next gen settop box software) community membership & operator licensees grew ~60% y/y in past year. US telco CenturyLink recently licensed RDK,” said Thadani. “Over 5 mln RDK devices have been deployed so far, mostly by Comcast. Comcast on the company’s Q1 earnings call sounded optimistic on next gen set top box deployments going forward as these deployments have helped reduce subscriber churn by ~20–30% & increased Video On Demand usage 20-30%.”

In a research update to clients today, Thadani resumed coverage of Espial with an upgrade to “Buy” and a raise of his one year target price from $4.50 to $4.75, implying a return of 25% at the time of publication.

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