Best known for its domain registration business, some more recent initiatives have Cantor Fitzgerald Canada analyst Scott Curtis feeling optimistic about the chances of Tucows (TSX:TC, Nasdaq: TCX) to grow its business.
In a research report to clients yesterday, Curtis initiated coverage of Tucows with a “Buy” rating and a one year target price of (C) $45.00, implying a return of 47% at the time of publication.
Curtis says the acquisition of Ting Mobile proved Tucows could operate outside of its comfort zone.
“Tucows’ share price has appreciated considerably over the last few years due to the rapid success of its Ting Mobile business; we continue to believe its mobile business will grow division sales at a pace greater than 50%,” says Curtis. “Ting Internet should begin to provide a material contribution in 2017 as its first two markets scale to a critical mass; this “get rich slow, for a long time” business behaves like a modern utility, providing recurring cash flow with high visibility.”
Curtis says he is excited about the company’s recent entry into the gigabit fiber Internet industry, Ting Internet. The service has launched in two markets and the company has plans to expand it to five or six more in 2016.
The result of the three inititatives, points out the analyst, is a company that has multiple avenues to long term growth with stable cash flow generation. “Tucows,” says Curtis, is a growth story that is de-risked on many fronts.”