Buy Espial Group for a double, Mackie Research says

With its share price nearly halved since February, Mackie Research Capital analyst Nikhil Thadani says Espial Group (Espial Group Stock Quote, Chart TSX:ESP) is worth a look.

In a research update to clients today, Thadani maintained his “Buy” rating and one-year target price of $2.60 on Espial Group, implying a return of 100 per cent at the time of publication.

Thadani says Espial’s SaaS platform provides value that is not yet showing up in the company’s quarterly results.

“ESP could provide smaller operators and media companies an internet based, device agnostic direct to consumer channel,” Thadani explained. “These features could be especially useful to smaller operators in order to rapidly launch more flexible services. ESP’s SaaS platform, which could be gaining traction with the recent WOW deployment allows operators to launch new features in weeks vs. previously launching features in larger sets over months. Additional features include, analytics features to better drive targeted promotion and Alexa powered voice control, for example. Future features could include ad integration related plug-ins.”

On November 1, Espial will report its third quarter results. Thadani expects the company will post and EBITDA loss of $300,000 on revenue of $6.3-million, a little softer than the street consensus of an EBITDA loss of $200,000 on a topine of $6.7-million.

Thadani thinks potential catalysts for ESP include the possible acceleration of deployment from its German customer, possible new contracts that might have been signaled by recent industry press and the company turning EBITDA positive, which the analyst predicts will happen in Q4/2018.