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Beacon Securities maintains “Buy” rating on Tecsys

Tecsys

Following the company’s fourth quarter results, Beacon Securities analyst Gabriel Leung has maintained his “Buy” rating on Tecsys (Tecsys News, Stock Quote, Chart TSX:TCS)

On Tuesday, Tecsys reported its Q4 and fiscal 2019 results. In the fourth quarter, the company posted earnings of $100,000 on revenue of $23.2-million, a topline that was up 23 per cent over the same period last year.

“Fiscal 2019 was an exciting year for Tecsys,” CEO Peter Brereton said. “The rapid shift to SaaS provides tremendous value creation and we made great progress on every significant front. In November 2018, we purchased OrderDynamics, a Canadian-based SaaS distributed order management solution business. This acquisition greatly extends our supply chain execution and warehouse management system offerings by adding omnichannel capabilities for our clients running complex retail supply chains. In February 2019, we continued our European expansion through the acquisition of PCSYS, a leading supplier of hardware and software solutions for warehouse management, transportation management and labelling systems. The integration of these businesses is well underway. In fiscal 2019, we signed 23 new accounts compared to 12 in fiscal 2018. On the healthcare front, fiscal 2019 was a tremendous year. We added six new hospital networks, including two that were signed in the fourth quarter. We are confident our expanding product suite offering and growing global reach should help us to continue to attain strong booking growth rates going forward. In January 2019, we unveiled our new brand. It is our inherent culture of excellence that drove the rebranding rather than the other way around. The feedback has been tremendous as both clients and employees recognize the brand as bringing clarity to our abilities to empower good companies to solve complex uncertainties in their supply chains.”

Leung says TCS is experiencing near term SaaS transition pains, but believes the friction will be worth it in the end.

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“While some might be disappointed by the near-term impact of the transition of license revenues to SaaS, we believe it will be to the benefit longer-term earnings visibility. We also remain bullish on Tecsys’ enviable position as a global supply chain solution player and broad product footprint, which could help to accelerate future growth and increase its value to potential acquirers down the road.”

In a research update to clients Wednesday, Leung maintained his “Buy” rating and one-year price target of $15.00 on Tecsys, implying a return of 12 per cent at the time of publication.

Leung thinks TCS will post EBITDA of $4.4-million on revenue of $93.3-million in fiscal 2020.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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