Absolute Software has 63% upside, says Industrial Alliance

Ahead of its second quarter results, Industrial Alliance Securities analyst Blair Abernethy is feeling good about Absolute Software (TSX:ABT).

On Monday, February 6, Absolute Software is expected to report its Q2, 2017 results. Abernethy expects the company will generate EBITDA of $1.6-million on revenue of $22.5-million, in-line with the street consensus of $1.6-million in EBITDA on a topline of $22.8-million.

Abernethy says he will be watching how the company’s revamped sales force is making progress with new bookings, particularly in non-education verticals such as healthcare, financial services, and government. Overall, the analyst thinks the stock is undervalued.

“Given the recent product improvements and the completion of the sales revamp, we expect an improved sales contract trajectory in F2017 to provide more confidence in the stock as the year progresses,” says the analyst.

In a research update to clients today, Abernethy maintained his “Buy” rating and one-year price target of $11.00 on Absolute Software, implying a return of 63.2 per cent at the time of publication.

The analyst expects Absolute will post EBITDA of $6.9-million on revenue of $92.6-million in fiscal 2017. He thinks these numbers will improve to EBITDA of $9.0-million on a topline of $100.2-million the following year.