Questor Technology is a buy despite soft Q1, says Mackie

Despite a quarter that fell short of their expectations, Mackie Research Capital analysts Douglas Ibbitson and Russell Stanley still think Questor Technology (Questor Technology Stock Quote, Chart, News: TSXV:QST) is undervalued.

Yesterday, Questor reported its Q1, 2016 results. The company earned $4,159 on revenue of $2.2-million, a topline that was down 6 per cent from the same period last year.

“In this challenging economic environment, our clients in Canada will be looking for technology solutions that are reliable, reduce operating costs, are cost-effective, have a track record and are proven. Cleanly combusting methane using Questor’s technology solutions will reduce GHG emissions ninefold cost effectively as the the global warming potential (GWP) of methane is 25 times that of CO2. Therefore venting or inefficient combustion increases the greenhouse gases emitted,” said CEO Audrey Mascarenhas. “In response to regulations and demand for our equipment in Colorado, we deployed our mobile rental units to the state and set up an operations facility to meet demand for regulated closed-loop completions.”

The Mackie analysts note that the quarter fell of their estimates and consensus estimates on revenue, adjusted EBITDA and earnings. But they say they are still believers in Questor given a wider time frame.

“We continue to believe in the mid/long-term market potential for QST’s technology, but remind investors that they will need to be patient, given the headwinds the Company faces with respect to customer spending,” said the analysts.

In a research update to clients today, Ibbitson and Stanley maintained their “Speculative Buy” recommendation and one-year target price of $1.50 on Questor Technology, implying a return of 52 per cent at the time of publication.