Trending >

Mitel is cheap right now, says Cormark


MitelThe current price of Mitel (Mitel Stock Quote, Chart, News: TSX:MNW, Nasdaq:MITL) is making the upside from its accelerating cloud business a cheap option, says Cormark analyst Richard Tse.

On Thursday, Mitel will report its Q2, 2015 results. Tse expects the company will post (all figures in U.S.) Adjusted EBITDA of $38-million on revenue of $293-million, slightly above the street consensus of Adjusted EBITDA of $37-million on a $291-million topline.

Tse thinks uncertainty about the progress of Mitel’s cloud business and the integration of its recent $650-million acquisition of U.S-based 4G LTE player Mavenir is spooking investors, making them blind to the underlying value in the company right now.

“In our view, the uncertainty around that progress is what has reigned in the valuation on this name to 1.2x EV/S, 7x EV/EBITDA and 7.9x P/E despite having growth businesses (cloud and Mavenir),” says Tse. “No doubt, that caution is reasonable considering Mavenir had a number of operational (not technology) challenges prior to Mitel’s acquisition. But given the current valuation plus Mitel’s cloud segment, we believe investors are getting an inexpensive option on that growth at the current valuation.”

Tse says his view of Mavenir is that of a company with great products that should benefit from the management experience that Mitel brings to the table. He points to the company’s “marquee” customer base that includes service providers like AT&T, Deutsche Telekom, T-Mobile, and Vodafone.

In a research update to clients yesterday, Tse maintained his “Buy” rating and (U.S.) $16.00 one year target on Mitel.

At press time, shares of Mitel on the Nasdaq were down .6% to $9.49.

More Cantech Wireless

We Hate Paywalls Too!

At Cantech Letter we prize independent journalism like you do. And we don't care for paywalls and popups and all that noise That's why we need your support. If you value getting your daily information from the experts, won't you help us? No donation is too small.

Make a one-time or recurring donation

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
insta twitter facebook


Leave a Reply