Ahead of Absolute Software’s (TSX:ABT) third quarter results, Industrial Alliance analyst Blair Abernethy thinks investors should be buying the stock.
In a research update to clients today, Abernethy maintained his “Buy” rating and one-year price target of $11.00 on Absolute Software, implying a return of 70.5 per cent at the time of publication.
Abernethy says he expects third quarter revenue will come in at $21.5-million, slightly lower than the consensus of $21.6-million, and down 11 per cent from the same period last year. He says this reflects the company’s disposing of two product lines and repositioning its sales efforts. He thinks this will be a temporary lull, however.
“We expect Absolute’s stock to recover this year following the rationalization of products, the issuer bid (C$50M repurchased at C$8.00 last October), partnership traction, and a refocus on sales execution,” says the analyst. “By the second half of 2016, we expect an improved sales contract trajectory to provide more confidence in the stock.”
Abernethy notes that Absolute has expanded its partnerships with the likes of Getac, DDM, and Microsoft. He says he believes the company is considering licensing deals with other software providers and is looking into customized solution opportunities for large customers.