Based on its recent earnings report, Echelon Wealth Partners analyst Rob Goff is maintaining his stance on Microsoft professional services provider Quisitive Technology Solutions (Quisitive Technology Solutions Stock Quote, Chart TSXV:QUIS), saying in a Wednesday client update that the company is well-positioned in the fast-growing cloud computing segment.
On Tuesday, Quisitive Solutions reported its fourth quarter and fiscal 2018, coming in with quarterly revenue of $3.9 million and an EBITDA loss of $0.2 million. Those numbers were better than Goff’s estimates of $3.5 million and negative $0.66 million, respectively, with the analyst pointing out the company’s 20.7-per-cent quarter-over-quarter growth rate. (All figures in US dollars unless noted otherwise.)
“We continue to forecast strong shareholder returns as Quisitive gains traction and scale over time as a consolidator in the Azure professional services space. We see Azure gaining share in the broadly defined cloud ecosystem where QUIS looks to be a consolidator of the fragmented tier of mid/small sized professional service providers,” says Goff.
The analyst notes that Quisitive was nominated as a finalist for Microsoft’s US partner of the year award, and he also point to Gartner results which suggest that the worldwide public cloud services market is projected to grow by 17.5 per cent in 2019 to total $214.3 billion, with the expectation that more than 30 per cent of tech providers’ new software investments will shift from cloud-first to cloud-only.
“QUIS took advantage of strength in its Q318 pipeline and drove engagement across 35 enterprise clients to deliver fourth quarter profitability that exceeded targets,” says Goff. “QUIS completed 30 Azure Assessments in the quarter and from those, secured 22 new projects of Azure Migration, Modern BI, Azure DevOp and Office 365 implementations. 2019 organic revenue target coincides with our revenue estimates of just shy of $16 million. We believe QUIS’ Adj. EBITDA drain will lessen as the year progresses and as revenues surpass $4 million per quarter.”
Goff has adjusted his forecasts, now calling for fiscal 2019 revenue of $15.9 million (previously $15.5 million) and Adjusted EBITDA of negative $0.4 million (previously negative $1.0 million).
The analyst is maintaining his “Speculative Buy” rating and C$0.20 target price, which represented a projected return of 90.5 per cent at the time of publication.