The same way it has for most tech stocks, October has not been kind to Solium Capital (Solium Capital Stock Quote, Chart TSX:SUM).
That spells opportunity, says National Bank Financial analyst Richard Tse, who says this dip is the perfect time to pick up SUM on sale.
Since hitting its all-time high of C$13.24 on July 23rd, SUM has pulled back nearly 17% to C$11.05 as of Friday’s close,” the analyst notes. “Despite the pullback, SUM is still in positive territory for 2018, up just under 2% year to date which is more than we can say for the S&P TSX Small Cap Index which is down nearly 13% this year. In our view, the relative outperformance reflects a name that’s executing well on a strategy to fortify market share gains in what we estimate to be a $1.6 billion addressable market.”
In a research update to clients today, Tse maintained his “Outperform” rating and one-year price target of $14.00 on Solium Capital, implying a return of 27 per cent at the time of publication.
Tse thinks Solium will post EBITDA of (All figures USD) $11.1-million on revenue of $105.8-million in fiscal 2018. He expects those numbers will improve to EBITDA of $23.3-million on a topline of $124.9-million the following year.
“Solium remains one of our favourite names as we look beyond the near-term market volatility given its continued progress on capturing an increasing proportion of the equity administration market,” the analyst adds.