Laurentian Bank Securities analyst Nick Agostino likes the look of mdf commerce (mdf commerce Stock Quote, Chart, News TSX:MDF) from here, saying in an update to clients on Thursday that the company’s growth in its SaaS-based offerings and onboarding of new clients have been impressive.
Montreal-based mdf commerce, which provides SaaS solutions for optimizing interactions between buyers and sellers via e-commerce, supply chain and e-marketplace solutions, has come forward with a name change and rebranding from being Mediagrif Interactive Technologies to now mdf commerce, part of a wider strategic plan and a year-long refocus on consolidating its platforms.
Mdf commerce held its virtual AGM on Wednesday to bring forth its new image.
“Seeing how our clients utilized commerce technology this year while in an objectively unique and challenging context was nothing short of incredible. As we position ourselves for the future, this brand change is a strong signal of just how much the company has transformed. Our core mission is to enable the flow of commerce, to effectively help our customers navigate and succeed within a context of accelerating commerce digitalization,” wrote president and CEO Luc Filiatreault in a press release on Thursday.
In his report, Agostino pointed to what he called mdf’s impressive client onboarding of late, saying “MDF delivered a notable increase in clients in all segments within the last year, buoyed both organically and from the acquisition of K-Centric. Of note, in Strategic Sourcing it added 244 buyers and 18,000 suppliers, and as part of Unified Commerce it added 115 SMBs in e-Commerce and 479 in Supply Chain.”
Agostino said mdf has distinguished competitive advantages in its Strategic Sourcing segment, where the company has over the past year added 244 buying organizations, for a total above 3,200 and including the UK’s National Health Service, the Canning Group in the US, AMD and the Government of Newfoundland & Labrador, as well as 18,000 suppliers.
Over the same stretch, mdf’s E-commerce business added 115 small- to medium-sized businesses, while its supply chain business added 479 clients, Agostino said.
“The [AGM] reinforced a lot of the company’s transformative activities over the last year, but particularly pleasing to us was the scale and addition of new clients which exemplifies not only the interest in the platforms from an organic perspective, but also the growth available through M&A. This serves as a key basis for our multiple increase, along with its improving key SaaS metrics,” Agostino said.
In terms of valuation, Agostino sees MDF to be trading at a discount, estimating the stock to currently trade at 1.9x next 12 months sales versus MDF’s peers at 3.6x. The analyst said that as MDF continues to execute on its growth plans, a multiple of at least 4.0x is attainable.
With the update, Agostino has reiterated his “Buy” rating but increased his target price from $9.00 to $11.00, which at press time represented a projected 12-month return of 35.6 per cent. Year-to-date, MDF’s share price has risen 19 per cent.
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