Buy Solium Capital stock on this pullback, National Bank Financial says

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.