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Sangoma Technologies is a double, Beacon Securities says

Sangoma Technologies Corporation
The Markham, Ontario head office of Sangoma Technologies.
The Markham, Ontario head office of Sangoma Technologies.

A better than expected first quarter has Beacon Securities analyst Gabriel Leung feeling bullish about Sangoma Technologies (Sangoma Technologies Stock Quote, Chart, News: TSXV:STC).

On Thursday, Sangoma reported its Q1, 2018 results. The company earned $390,000 on revenue of $11.85-million, a topline that was up 104 per cent over the same period last year.

“Our first quarter results provide a very good start to the year,” said CEO Bill Wignall. “Revenue was strong, augmented by a large one-time order that will not recur next quarter, which helped offset the significant revenue impact of a substantially weakened U.S. dollar and the seasonality exhibited in prior years. It is especially gratifying to see our quarterly EBITDA above $1-million for the first time. I’m also really pleased with the positive contribution, as anticipated, from the VoIP Supply acquisition completed early in the quarter. I’d like to extend a warm welcome to that great group of talented people in Buffalo, who are now part of the growing Sangoma family.”

Leung says that large order was a positive but notes that the company probably would have had a very good quarter without it.

“If we assume the large order was ~10% of revenues and exclude ~$3.75M for VoIP Supply (based on the company’s expected annual contribution of ~$15M), then we estimate organic revenue growth was ~20% y/y, which we view as being positive particularly given the strong forex headwinds in the quarter,” the analyst says.

In a research update to clients today, Leung maintained his “Buy” rating and one-year price target of $1.55 on Sangoma Technologies, implying a return of 99 per cent at the time of publication.

Leung thinks Sangoma will generate EBITDA of $3.9-million on revenue of $46.6-million in fiscal 2018. He expects those numbers will improve to EBITDA of $5.6-million on a topline of $51.5-million the following year.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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