Syncordia is a speculative buy, says Mackie Research Capital

A second quarter that was essentially in-line with his expectations hasn’t dampened Mackie Research Capital analyst Nikhil Thadani’s bullish stance on Syncordia Technologies (Syncordia Technologies Stock Quote, Chart, News: TSXV:SYN).

Yesterday, Syncordia reported its Q2, 2015 results. The company lost (U.S.) $137,607 on revenue of $3.89-million.

“We are very pleased with the organic growth and better customer accountability and focus at both HSI (Health Services Integration Inc. a U.S.-based company acquired by Syncordia in November of 2014) and Paragon since our acquisition of both companies,” said CEO Mike Franks. “Paragon has experienced growth in the number of customers as we continue to sign up behavioural health providers to our ONC certified software solution. In April, 2015, at the time of Syncordia’s acquisition, Paragon had 552 active providers and has grown that to 571 active providers as of Sept. 30, 2015.”

Thadani says the quarter was about what he expected on the topline, with a slight beat in EBITDA. The analyst says he will be watching closely to see that the company is closing the opportunities in its pipeline.

“We expect new contracts to rebuild lost revenue in C2016 as signed & potential contracts disclosed by the company in October provide ~70-80% revenue visibility relative to ~$5.5 mln/yr lost revenue,” says the analyst. “We estimate $3-3.5 mln/yr potential annual revenue from contract opportunities in addition to $1 mln annual revenue from already signed contracts. To this end, it is important SYN starts converting pipeline into signed contracts by Mar 2016 to account for on-boarding time. In addition to pipeline updates, we would seek colour from management on lean initiatives pertaining to onboarding referenced in the Q2 MD&A.”

In a research update to clients today, Thadani maintained his “Speculative Buy” rating and one-year target price of $2.00 on Syncordia, a target that is 440 per cent higher than the company’s November 24 closing price of $0.37.