Symbility Solutions is undervalued, says Cormark

A solid quarter from Symbility Solutions (Symbility Solutions Stock Quote, Chart, News: TSXV:SY) is being regarded by Cormark analyst Richard Tse as further confirmation of his bullish thesis on the stock.

Yesterday, Symbility reported its Q4 and fiscal 2015 results. In the fourth quarter, the company lost $876,000 on revenue of $8.1-million, a 16 per cent bettering of the $6.9-million the company reported in the same period last year. The company also provided guidance that said it expects to meet or exceed $33-million in revenue in 2016.

“Symbility closed the year with its strongest revenue quarter in our history giving us revenue of $16-million over the second half of the year, eclipsing our guidance of $15-million and achieved positive adjusted EBITDA again this quarter,” said CEO James Swayze. “With the momentum we have built in our sales pipeline, conversion rate and recently announced deals, we feel well positioned to drive further growth into our core markets in 2016 in addition to continuing our expansion efforts through international investments.”

Tse was happy with the “solid” results, but says he is more pleased by the company’s guidance and the fact that it does not include the upside from any potential acquisitions. The analyst says the company’s demonstrated ability to close deals is impressive.

“Symbility’s ramp in pilots is certainly positive in that it’s a leading indicator of future revenue,” says Tse. “Equally important, those pilots are with sizable customers with “a few within the top 10” and broad based in geography (Symbility is currently active in 16 countries). At this point, it appears the ramp in pilots is attributed to prior efforts in expanding Symbility’s global reach, its VAR channel, and continued expansion in its product line. But as positive as it is to see a ramp in pilots, it’s even more positive to note the conversion rate is also moving in the right direction at 71% (from 67% last year).”

In a research update to clients today, Tse maintained his “Buy (Speculative)” rating and one-year price target of $0.60 on Symbility Solutions.