RDM Corp. gets upgraded to “Buy” at PI

New customer wins have PI Financial analyst Pardeep Sangha feeling bullish about RDM Corp. (RDM Corp. Stock Quote, Chart, News: TSX:RC).

Yesterday, RDM reported its Q2, 2015 results. The company earned (U.S.) $789,000 on revenue of $5.75-million.

“Growth in both our recurring payment processing and digital imaging revenue translated into increased profitability in the quarter,” said CEO Randy Fowlie. “In addition, we continue to see evidence of strong market acceptance this quarter with two new financial institutions selecting RDM to replace existing RDC providers.” “One is a top 30 United States bank and the other is a large international bank. We look forward to partnering with these two new customers going forward.”

Sangha thinks the two new customers in the quarter are contributing to what he sees as an EBITDA growth story. The analyst is forecasting Adjusted EBITDA growth of 36% in fiscal 2015 and 11% the following year.

“We believe RDM will continue to improve margins and profitability as the Company shifts towards greater recurring revenue and transactional-based services, leading to a higher share price,” said Sangha.

In a research update to clients yesterday, Sangha moved his recommendation on RDM Corp. to “Buy” from “Neutral” and raised his one year target price on the stock to $4.50, from $3.80.