Symbility Solutions is a speculative buy, says Cormark

A non-event quarter hasn’t shaken Cormark analyst Richard Tse’s belief in the value of Symbility Solutions (Symbility Solutions Stock Quote, Chart, News: TSXV:SY).

Yesterday, Symbility reported its Q1, 2016 results. The company lost $1.52-million on revenue of $7.9-million, a 57 per cent topline bump over the $5.0-million the company reported in the same period last year.

“Revenue for Q1 represents the strongest first quarter in our history and sets the stage for Symbility to meet or exceed our guidance of $33-million in 2016,” said CEO James Swayze. “The operational changes we implemented plus the new products we launched last year have accelerated our deal closure and deployment cycle time, which give us a great deal of confidence in our growth toward the end of this year and into 2017.”

Tse says Symbility’s first quarter results came in slightly below his expectations, but he still thinks the company is undervalued.

“While the outlook for the fiscal year remains unchanged, we would note that costs have been moving higher as the company invests for expansion. In our view, it’s an item to keep tabs on as our investment thesis calls for expanding margins as pipeline conversions drive incremental revenue and what we believe to be leverage,” says the analyst. “While Q1/F16 was mixed, the release is only 6 weeks following the company’s last conference call and F2015 update and in our view, it does not appear there has been much change to the outlook going forward and underscored by the company’s unchanged guidance for the 2016. At 2x EV/S, we continue to like the risk-to-reward profile for SY, particularly when peers trade at ~5x EV/S. We believe SY is an attractively valued SaaS name in our coverage universe.”

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