While he is not yet ready to pull the trigger on the stock, Haywood Securities analyst Pardeep Sangha thinks investors should be putting real estate tech junior Clarocity (Clarocity Stock Quote, Chart, News: TSXV:CLY) on their radar.
In a research report to clients today, Sangha put Clarocity on his watchlist of technology companies, but did not assign a price target or rating. The analyst says the firm is trading at a discount because investors have concerns about its ability to continue operating as a going concern.
“We believe Clarocity is at an inflection point and could experience rapid growth in the coming quarters,” Sangha says, “However, despite the Company’s potential growth opportunities, we are not prepared to assign a target price and recommendation to Clarocity at this time because of its weak balance sheet, negative cash flows, and complex share capitalization structure.”
Calgary-based Clarocity supplies tech solution for appraisal, valuation and inspection of residential properties.
Sangha says there is much to like about Clarocity’s market position.
“We believe Clarocity is an emerging player given its proprietary alternative appraisal products and experienced management team,” the analyst says, “Clarocity has over 350 customers, including Fannie Mae, Freddie Mac, and a number of lenders, mortgage insurance companies, government agencies, credit unions, and investment funds.”
Sangha thinks Clarocity will post and Adjusted EBITDA loss of $4.2-million on revenue of $16.0-million in fiscal 2017. He expects those numbers will improve to an EBITDA loss of $700,000 on a topline of $26.3-million the following year.
Disclosure: Clarocity is an annual sponsor of Cantech Letter and editor Nick Waddell owns shares of the company.