Its third quarter results have him feeling a little less bullish on Siyata Mobile (TSXV:SIM), but Beacon Securities analyst Gabriel Leung still thinks there is plenty of money to be made on the stock.
On Wednesday, Siyata Mobile reported its Q3, 2017 results. The company generated EBITDA of $98,000 on revenue of $4.9-million, a topline that was up 32 per cent over the same period last year. “We are very pleased with our Q3 results,” said CEO Marc Seelenfreund. “The continued strong growth, including higher margins in North America for the quarter, continues to be positive for shareholders and the balance sheet. Additionally, the addition of our recurring revenue software licences create an additional high-margin revenue stream allowing us to continue our growth into Q4 and beyond.”
In a research update to clients today, Leung maintained his “Buy” rating, but lowered his one-year price target on Siyata Mobile from $1.25 to $1.20, implying a return of 161 per cent at the time of publication.
Leung notes that Siyata’s sales figures are still mainly driven by it legacy devices. He thinks that when its 4G/LTE UV350, which is still in device approval phase, is ready to go it could be a considerable driver of revenue and gross margin.”
“Bottom-line, we believe the Q3 results represented another good quarter of organic growth,” the analyst says. “We believe this pace of growth could be sustained over the near-to-mid-term as the company continues to execute on its partner strategy, particularly for its new 4G products with its North American cellular operator and other partners. We’ve lowered our target price from $1.25 to $1.20 mainly due to working capital changes (based on 12x FY19 EV/EBITDA).
Leung thinks Siyata Mobile will generate EBITDA of $400,000 on revenue of $19.9-million in fiscal 2017. He expects those numbers will improve to EBITDA of $3.0-million on a topline of $30.3-million the following year.