Solium Capital’s deal with Morgan Stanley is "monumental", says Haywood

A deal with Morgan Stanley has Haywood analyst Pardeep Sangha feeling bullish about Solium Capital (Solium Capital Stock Quote, Chart, News: TSX:SUM).

Yesterday, Solium Capital announced a deal in which its stock plan administration platform will become the equity administration technology supporting Morgan Stanley’s global stock plan services business for U.S.-listed corporations and corporations that are existing under U.S. laws or have headquarters in the U.S.

“This milestone agreement in the U.S. marketplace is a strong endorsement of Shareworks as the premier cloud-based technology platform for global equity plan administration,” said Solium CEO Marcos Lopez. “The Shareworks platform’s modern architecture, rich feature set and international capabilities was a key differentiator for Morgan Stanley as it looked for a technology solution that would support its share plans business. This partnership with Morgan Stanley is our largest partnership, and first with a major wealth manager in the United States. We look forward to working with Morgan Stanley and further enabling its leading stock plans business.”

Sangha says the white-label deal with Morgan Stanley is “monumental” and could become the template for others.

“This partnership expands Solium’s customer base and positions Solium as the leading independent vendor for equity plan management,” says the analyst. “This will be Solium’s largest partnership to date and is a strong endorsement for Solium’s product and technology. We believe this deal could potentially lead to additional white label opportunities in the future.”

In a research update to clients yesterday, Sangha maintained his “Buy” rating on Solium Capital, but raised his one-year price target on the stock from $9.20 to $9.70, implying a return of 19.2 per cent at the time of publication.

Sangha believes Solium will generate EBITDA of $16.5-million on revenue of $102.6-million in fiscal 2016. He expects these numbers will improve to EBITDA of $28.2-million on a topline of $142.7-million by fiscal 2018.

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