Pivot Technology’s turnaround is gathering steam, Echelon Wealth says

It’s been a rough haul over the past couple of years for Pivot Technology Solutions (Pivot Technology’s Stock Quote, Chart TSX:PTG) but the turnaround for the company is now in full effect, according to Echelon Wealth Partners analyst Gianluca Tucci, who on Wednesday reiterated his “Buy” recommendation and target price of C$2.50, representing a projected return of 83 per cent at the time of publication.

IT services company Pivot Technology recently held its AGM, where CEO Kevin Shank touted the advancements made with Smart-Edge, the company’s Multi-Access Edge Computing (MEC) platform which has partnered with Intel and has won a number of awards this year. Tucci says that a highlight of the AGM was the vision that Shank shared of Pivot becoming the “Number 1 Edge Services Partner in North America.”

And while revenue from major clients has deteriorated over recent quarters, Tucci says that Pivot’s turnaround is now picking up steam.

“We believe Pivot will continue to deliver robust cash-flow at a leaner operating structure with a focus on quality revenue. The recent reductions in operating expenses and cost of goods sold over the past few quarters are impressive and have been increasingly evident. We believe the turnaround at Pivot has picked up steam as a consequence of revenue from majors declining starting in Q318 and should benefit the Company positively in the quarters & years to come. With now a focus on more accretive revenue contribution and profitability, we believe the core business at Pivot still has room for improvement on services growth & contribution and expect to see results from this division improve in the coming quarters as its salesforce evolves to the new selling model,” writes Tucci in a client update.

“However, with this being said, we believe the principal business at Pivot remains healthy and the Company at the core is on much better footing today than one-year ago,” he says.

The analyst thinks that PTG will generate fiscal 2019 revenue and adjusted EBITDA of $1,232 million and $21 million, respectively, and fiscal 2020 revenue and adjusted EBITDA of $1,270 million and $27 million, respectively. (All figures in US dollars unless noted otherwise.)

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