Tier 1 Carriers to Propel Siyata Mobile’s Growth, says Fundamental Research

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their forecast of $15.28 million and was down 19.90% YoY from $17.75 million in 2017, due to lower demand for 3G/ outdated products internationally.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.