Ahead of its fourth quarter results, Industrial Alliance Securities analyst Blair Abernethy thinks Halogen Software (TSX:HGN) has some upside.
On Thursday, Halogen will report its Q4 and fiscal 2016 results. Abernethy expects the company will post EBITDA of $2.3-million on revenue of $18.3-million. The street consensus is for EBITDA of $1.8-million on a topline of $18.3-million.
Abernethy says he expects management to provide commentary around the company’s strategic review process, but says even without the end result of a sale he sees a lot of positives for Halogen as a new fiscal year begins.
“We expect to see improving profitability into 2017 and continue to see longer term potential in this product segment and value in the recurring revenue base,” says the analyst. “We continue to believe that Halogen has a significant upsell opportunity within its current 2,000+ company installed base, as well as the opportunity to undertake tuck-in M&A opportunities in order to further broaden its technology and product portfolio. We will be watching for signs of module cross-selling success and increased market penetration in Q4.”
In a research update to clients today, Abernethy maintained his “Buy” rating and one-year price target of $12.00 on Halogen Software, implying a return of 16.5 per cent at the time of publication.
Abernethy thinks Halogen will post Adjusted EBITDA of $7.4-million on revenue of $71.9-million in fiscal 2016. He expects these numbers will improve to EBITDA of $9.6-million on a topline of $77.7-million the following year.