BlackLine Safety is gathering steam, PI Financial says

Following another large purchase order, PI Financial analyst David Kwan has maintained his “Buy” rating on Blackline Safety (Blackline Safety Stock Quote, Chart TSXV:BLN).

On May 23, BLN announced that its largest Canadian customer placed a $1-million purchase order for G7x wearables featuring satellite communication and service plans with a three-year term.

“During their buying cycles, top-tier businesses thoroughly evaluate every vendor to ensure their investment delivers maximum value throughout their organization,” commented VP of sales Sean Stinson said. “Having won our client’s business for a second time, we demonstrated again how G7 products and services deliver superior value, compared to competitor offerings. The energy landscape is changing where businesses are undergoing a digital transformation to stay competitive,” commented Mr. Stinson. “For over a decade, Blackline has innovated at the forefront of industrial connected safety, delivering enterprise-ready solutions that work out of the box. Every G7x wearable generates large volumes of location-enabled data. While an employee may not notice a low level of gas while walking through a facility, G7x will capture that reading and report it to the Blackline Safety cloud, ensuring that maintenance teams receive this data.”

Kwan says Blackline has clear momentum.

“We note that this is the second large customer renewal involving an upgrade from the Loner to G7 platform, as BLN received a $1.1M purchase order in December 2018 from a prominent government safety agency in Canada,” the analyst says. This should help allay investor concerns regarding BLN’s ability to upgrade (Loner) customers, as their contracts come up for renewal. As we previously mentioned, the large deal and ultimately revenue momentum is continuing to build as (potential) customers have had more time to evaluate the market-leading (only full connected) portable gas detection solution. BLN has delivered three consecutive quarters of record revenue and we expect this performance to continue going forward.

In a research update to clients today, Kwan maintained his “Buy” rating and one-year price target of $9.00 on BLN, implying a return of 48 per cent at the time of publication.

Kwan thinks Blackline will post Adjusted EBITDA of negative $2.2-million on revenue of $33.1-million in fiscal 2019. He expects those numbers will improve to EBITDA of positive $8.4-million on a topline of $53.5-million the following year.