TECSYS is becoming a global player, Beacon Securities says

Following the company’s third quarter results, Beacon Securities analyst Gabriel Leung remains bullish on TECSYS (TECSYS Stock Quote, Chart TSX:TCS).

On February 28, TCS reported its Q3, 2019 results. The company lost $1.7-million on revenue of $18.8-million, a topline that was up nine per cent over the same period a year prior.

“With proprietary product revenue up 67%, total bookings up 42% and seven new accounts, this was a great quarter. There were many successful milestones we achieved in the third quarter, including the launching our new global brand identity, the acquisition of OrderDynamics, and Bill King joining the team as Chief Revenue Officer,” CEO Peter Brereton said. “Additionally we continue to make strategic investments with our expansion into Europe through the acquisition of PCSYS A/S, announced on February 1. We are very pleased with the many important steps we undertook this past quarter to build upon our strong market position and best situate Tecsys for accelerated growth.”

Leung notes that the quarter came in slightly below his expectations, but says good things are afoot at TCS.

“Bottom-line, while the eventual shift of license revenues to SaaS could create margin volatility, we believe it will be to the benefit future recurring revenue stability. Furthermore with the inclusion of PCSYS and OrderDynamics, we believe the company has transformed into a global player with a broader product footprint, which could help to accelerate future growth and increase its value to potential acquirers down the road.”

In a research update to clients today, Leung maintained his “Buy” rating and one-year price target of $15.00 on TECSYS, implying a return of 13 per cent at the time of publication.

Leung thinks TCS will post EBITDA of $3.6-million on revenue of $76.0-million in fiscal 2019. He expects those numbers will improve to EBITDA of $5.4-million on a topline of $90.4-million the following year.