Cortex Business Solutions is still cheap compared to its peers, says PI

A new customer win in the cleantech space is an example of Cortex Business Solutions’ (Cortex Business Solutions Stock Quote, Chart, News: TSXV:CBX) improving ability to expand into new verticals, says PI analyst David Kwan.

On Friday, Cortex announced a new three year contract with an unnamed client it described as “one of the largest overall producers of green energy in the United States”.

“We typically only announce new customers once they are live on the Cortex Network, however, the significance of this news is too important not to share with the markets in mass. Over the past 12 months we have invested deeply in building a world class sales organization to support our world class technology, and this announcement confirms that we are ready to win the business of the largest companies, against the largest competitors, in any vertical,” said CEO Joel Leetzow. “To enter a new vertical partnered with a company that is known for innovation and green technology, makes it just that much more exciting.”

Kwan says he thinks Cortex is still undervalued.

“Management continues to execute very well despite the ongoing tough oil price environment with organic growth set to reaccelerate and positive net earnings within reach,” he said. “Despite a close to 50% move up in the last year, the valuation remains compelling at just 2.0x CY17 sales, at a significant discount to its peers.”

In a research update to clients today, Kwan maintained his “Buy” rating and one-year price target of $4.75 on Cortex.

Kwan thinks Cortex will generate EBITDA of $200,000 on revenue of $10.9-million in fiscal 2017. He expects these numbers will improve to EBITDA of $1.4-million on a topline of $13.5-million the following year.

More Cantech Software