A weaker top line and a prolonged adoption cycle for its security platform are cause for another target price cut for Nubeva Technologies (Nubeva Technologies Stock Quote, Chart TSXV:NBVA) from analyst Gianluca Tucci of Echelon Wealth Partners, who remains bullish on the company nonetheless.
Nubeva, which offers cloud visibility and security solutions, reported its fiscal second quarter 2019 (ended October 31) financials on Monday, showing revenue of $277,000, which was almost double that of the previous year’s Q2, and consolidated EBITDA of negative $811,000. (All figures in US dollars unless otherwise noted.)
The results came in lower than expected, according to Tucci, who had forecasted $145,000 in software development and commercialization revenue when the result was $42,000. Nubeva’s consolidated EBITDA of negative $811,000 came in slightly better than Tucci’s negative $860,000.
But the company is now showing its ability to scale up, says Tucci, who points to its growth in subscribers, which has shot up from 57 by the end of October to 94 as of December 12,
“We believe NBVA is well positioned to capitalize upon the heightened need for cybersecurity at a time where data traffic (increasingly commerce related) is moving to cloud-based topologies and access increasingly requires mobile and virtual considerations. History supports our confidence in management’s ability to deliver on its strategic plan in these early days,” says Tucci, in a client update on Monday.
“We are adjusting our 12 month price target from C$2.00 to C$1.50 which reflects revised core software estimates and modestly prolongs the Prisms adoption cycle,” the analyst says. “Our F2019 to F2022 core revenue estimates are now $0.61 million, $1.90 million, $5.23 million, $15.69 million, respectively, versus $0.81 million, $2.07 million, $5.68 million, $17.05 million previously, respectively.”
Tucci’s target price represented a return of 348 per cent at the time of publication.