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Lumenpulse is undervalued, says Echelon Wealth Partners

Lumenpulse

LumenpulseAhead of its Q2, 2017 results, Echelon Wealth Partners analyst Amr Ezzat is feeling bullish about Lumenpulse (Lumenpulse Stock Quote, Chart, News: TSX:LMP).

On Thursday, December 8, Lumenpulse will report its second quarter results. The company is following on a first quarter in which it lost $0.01 a share on revenue of $45.3-million, a topline that was up 42 per cent over 2016’s first quarter.

Ezzat believes Lumenpulse is entering a phase of its development where the bottom line will become more consistent. He thinks the stock is undervalued.

“We believe the current valuation does not properly reflect the Company’s best-in-class earnings growth profile,” says the analyst. “Admittedly, management was focused in F2015 and F2016 on bolstering its product offering by executing and digesting acquisitions. F2017 is pegged as a year of execution where we foresee the Company focusing its efforts on integration, transitioning LMP into a double-digit EBITDA margin operator. While we recognize some of the lumpiness in quarterly performance and acquisition related one-timers, we expect these to taper off as early as the current fiscal year, significantly improving sales visibility and earnings quality. Namely, we expect Adj. EBITDA margins to reach 20.1% by F2020, up from 7.6% in F2016, driving a 65.9% Adj. EBITDA CAGR over the same period. ROIC moves from negative territory to 7% during the current fiscal year. Longer term, at higher utilization levels, we anticipate LMP to be a high-20% ROIC operator.”

In a research update to clients today, Ezzat maintained his “Buy” rating and one-year price target of $22.00 on Lumenpulse, implying a return of 30.6 per cent at the time of publication.

Ezzat thinks Lumenpulse will post Adjusted EBITDA of $26.4-million in fiscal 2017. He expects these numbers will improve to EBITDA of $41-million on a topline of $279.2-million the following year.

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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