Enghouse is still a buy, says CIBC

Even with all its gains year-to-date, CIBC World Markets analyst Stephanie Price remains bullish on enterprise software company Enghouse Systems (Enghouse Systems Stock Quote, Chart, News TSX:ENGH).

Last Thursday, Price delivered an update to clients in which she kept her “Buy” rating and put forward a price target of $98.00 per share.

Growth-by-acquisition story Enghouse has seen its share price take off in 2020, particularly during the COVID-19 pandemic, which has forced businesses to adopt work-from-home protocols. The new work reality is right up Enghouse’s alley, as the company’s base is in software for contact centres, information systems and video services.

Two of its recent notable pickups, for example, were video conferencing company Vidyo and media processing software company Dialogic.

Last month, Enghouse reported fiscal second quarter results for the period ended April 30, showing revenue up a healthy 58 per cent year-over-year to $140.9 million, with adjusted EBITDA up 81 per cent to $49.3 million.

“To date, COVID-19 has had an overall positive financial impact on Enghouse as sales of solutions that support remote work, including working from home, increased to meet heightened demand. Sales of Vidyo, our remote conferencing and telehealth/financial services video platform, and our remote computing solutions were particularly strong this quarter,” said the company in its Q2 press release on June 4.

Enghouse finished 2019 up 45 per cent and was already on the upswing in 2020 before the market pulled back. But since hitting a low of $35.87 on March 23, ENGH has powered up the charts, currently trading in the $75-$76 range.

Enghouse also comes with a small dividend, currently yielding 0.7 per cent.

At press time, Price’s $98.00 target represented a projected 12-month return of 32 per cent.