TSO3 is still undervalued, says M Partners

The ramp up in U.S. sales is just getting started for TSO3 (TSO3 Stock Quote, Chart, News: TSX:TOS), says M Partners analyst Daniel Pearlstein.

Yesterday, TSO3 reported its Q2, 2015 results. The company lost $1.74-million on sales of $136,969.

“During the quarter substantial progress was made on all fronts,” said CEO Ric Rumble. “Sales and service teams have been trained and customer calls are occurring at an ever-increasing pace. Subsequent to the close of the quarter initial orders have been received. In addition, during the quarter the company received notice of multiple patents being issued in a number of key markets including the United States.”

Pearlstein says the quarter was not indicative of what will come for TSO3, as its the recently FDA approved VP4 sterilizer came after the quarter’s end. He notes that the company should have its U.S. sales office open within a month, a move that should produce results quickly.

“Investors should focus on the near term sales ramp up as TSO3 already has “triple digit” sales leads for 2015 and 2016,” says Pearlstein. “We believe the US ramp up should be quick with the help of its motivated partner Getinge. Getinge has approximately 20% market share in the US sterilization market and TSO3 has been working diligently to train Getinge’s sales and service professionals in anticipation of the US launch. On the conference call TSO3 noted it is “ushering scores of quotes” quantified in the range of “triple digits” representing leads for this year and next year.”

In a research update to clients today, Pearlstein maintained his “Buy” rating and one year target of $3.50 on TSO3, implying a return of 92% at the time of publication.

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