Shares of TIO Networks (TIO Networks Stock Quote, Chart, News: TSXV:TNC) are on an extended roll, but PI Financial analyst David Kwan says he sees even more upside for the stock in the third quarter of 2016.
In a recent report to subscribers, analysts from PI revealed their top picks for the third quarter of this year, and Kwan said TIO is his.
Kwan says TIO is “firing on all cylinders” after the transformational acquisition of Softgate Systems in late April. He notes that the pickup made TIO the largest provider of walk-in bill payment services in North America, and says the integration of the company is going well, pointing to management’s indication of (U.S) $5-million in EBITDA synergies with more cost synergies to come.
“Management execution continues to be exceptional, helping drive accelerating organic growth, significant margin expansion, and strong FCF generation,” says Kwan. “In our view, despite a more than doubling of the share price in the last year, we think the stock remains attractively valued and believe there is significant additional upside through increases to (conservative) consensus estimates and multiple expansion, as management continues to execute well on its growth plan.”
Kwan says upcoming catalysts for TIO may include the company’s graduation to the TSX and/or another acquisition. The analyst currently has a “Buy” rating and a one-year price target of $3.35 on TIO Networks, implying a return of 48 per cent at the time of publication.
Disclosure: Cantech Letter’s Nick Waddell owns shares of TIO Networks.