BSM Technologies gets price target raise at Laurentian

A quarter that was better than he expected has Laurentian Bank Securities analyst Nick Agostino raising his price target on BSM Technologies (BSM Technologies Stock Quote, Chart, News: TSX:GPS).

Last Thursday, BSM reported its Q1, 2017 results. The company lost $465,000 on revenue of $18.36-million a 16.6 per cent uptick over the $15.7-million topline the company posted in the same period last year.

“Strong revenue growth, in combination with robust gross margins and net subscriber additions, saw us deliver record results for BSM this quarter,” said CEO Aly Rahemtulla. “Our fiscal 2017 first quarter was highlighted by closing our acquisition of the Mobi assets and the fulfilment of previously announced large-scale hardware deployments. As we integrate the Mobi product offering with our technology, we believe that our enhanced end-to-end enterprise solution will better serve our customers, deepen our client relationships and enable additional commercial growth across our verticals. Growing our pipeline, delivering exceptional customer service and executing on organic growth opportunities will be our focus this fiscal year. Further, and as announced previously, we plan to continue to invest in the business with the goal of achieving best-in-class sales and marketing, customer experience, and technology. Over all, we are excited about our first quarter results and the fiscal year ahead, and we look forward to continuing to build a bigger and better BSM.”

Agostino says BSM’s Q1 was, by most metrics, slightly better than he expected. He says many parts of the companies business are looking good.

“GPS’s pipeline and activity remains strong across several segments,” says the analyst. “From a subscriber perspective, Q4/F16 rail hardware shipments were deployed in FQ1, ahead of the company’s targeted FQ2 schedule. On the government side, a bump from winter maintenance contracts came in as expected, and we expect a further increase heading into the peak FQ2 period. In construction, FQ4 rollouts continue into 1H/F17, while the pipeline remains robust.

In a research update to clients today, Agostino maintained his “Buy” rating, but raised his one-year price target on BSM Technologies from $1.75 to $2.15, implying a return of 34.4 per cent at the time of publication.

Agostino thinks BSM will generate EBITDA of $9.3-million on revenue of $74.6-million in fiscal 2017. He expects these numbers will improve to EBITDA of $14.9-million on a topline of $80.8-million the following year.