Some new data that reveals strengthening PC sales has Industrial Alliance Securities analyst Blair Abernethy feeling bullish about Absolute Software (TSX:ABT).
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 45.2 per cent at the time of publication.
Abernethy notes that two large partners of Absolute, Lenovo and HP, recently reported better hardware sales. For its April quarter, which was reported yesterday, HP saw sales increase by 12 per cent. Lenovo’s PC and Smart Devices segment saw sales climb five per cent, year over year. The analyst says this development adds to what he sees as an already attractive investment.
“We see several potential upcoming catalysts for Absolute’s stock, including more large direct customer wins, traction with its new security product, and additional embedded solution wins,” he says. “Also given its relatively cheap valuation and having an activist investor in Crescendo Partners on the board, in our view, increases the probability of Absolute being a potential take out target. Given the product enhancements this year and the completion of the sales force revamp, we expect an improving sales trajectory into F2018.”
Abernethy thinks Absolute will post Adjusted EBITDA of $7.8-million on revenue of $92.1-million in fiscal 2017. He expects these numbers will improve to EBITDA of $10.2-million on a topline of $98.5-million the following year.