The latest big tech IPO on the TSX is undervalued, says Canaccord Genuity analyst Robert Young.
In a research report to clients today, Young initiated coverage of Real Matters (Real Matters Stock quote, Chart, News:TSX:REAL) with a “Buy” rating and a one-year price target of $16.00, implying a return of 32.3 per cent at the time of publication.
Young says the Markham-based fintech has the right product at the right time. He believes the company is addressing a large market with little penetration, already has an impressive client list, and that the company’s gains in market share will offset any potential weakness in the U.S. mortgage market.
“We believe that Real Matters, a hosted network management software vendor with a focus on mortgage lenders, is emerging as an important player in the massive US residential mortgage market,” says the analyst. “Recent Tier-1 wins and the improved profile and transparency provided by its Initial Public Offering are likely to drive adoption among the company’s conservative customers. We expect a 20-25% gross revenue CAGR over the next five years alongside EBITDA margin expansion as the company drives market share higher.”
Young thinks Real Matters will post EBITDA of $6.3-million on revenue of $298.1-million in fiscal 2017. He expects those numbers to improve to EBITDA of $17.3-million on a topline of $369.3-million the following year.
On May 11, Real Matters completed its IPO with a secondary offering in which it sold just over 12-million shares at $13.00, raising the company more than $156-million.
Leave a Reply
You must be logged in to post a comment.
Comment