Despite weaker than expected 2018 annual financials, Fundamental Research analyst Anthony de Ruijter says Siyata Mobile’s (Siyata Mobile Stock Quote, Chart TSXV: SIM) still has strong growth prospects, led by Tier 1 US carrier launches. The analyst this week maintained his “Speculative Buy” rating and target price of $1.23 on the stock.
Siyata Mobile, a provider of mobile communications hardware for commercial fleets and first responders, reported earnings on April 29th which included revenues of $14.22 million in 2018 (year ended December 31, 2018), which missed their forecast of $15.28 million and was down 19.90% YoY from $17.75 million in 2017, due to lower demand for 3G/ outdated products internationally.
The company reported an EBITDA loss of $7.42 million and comprehensive net loss of $10.69 million. Gross margins decreased YoY from 21.85% in 2017, to 14.48% in 2018, which was significantly lower than the analyst’s forecasted gross margin of 28.02%, due to lower margin 3G sales.
de Ruijter points says SIM is “transitioning to a 4G/ LTE dominant product portfolio, with both the Uniden® UV350 and 4G/ LTE variants of the company’s legacy product families expected to dominate the company’s sales in 2019. As a result, we expect a significant reversal in the current trend of revenue decline.”
The company had a cash position of $2.42 million and working capital of $4.57 million, along with a debt position of $4.13 million. Declining sales and poor financials does not impact the forward guidance on the stock.
“Based on expectations of the Uniden® UV350’s performance upon initiation of sales through major carrier channels, as well as the introduction of 4G/ LTE product lines to replace legacy 3G products, we are maintaining our 2019 revenue forecast of $27.58 million and introducing our 2020 revenue forecast of $40.21 million.”
De Ruijter revised the previous 2019 net loss forecast of $1.47 million to $1.72 million and provided a 2020 net earnings forecast of $1.44 million.
Disclosure: Siyata Mobile is an annual sponsor of Cantech Letter.