Wishpond Technologies remains undervalued, says iA Capital

A strong earnings beat in the latest quarter from Canadian marketing platform Wishpond Technologies (Wishpond Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:WISH) has iA Capital Markets analyst Neehal Upadhyaya staying bullish on the stock. Upadhyaya reviewed the results in a Friday report where he maintained a “Buy” rating on WISH. 

Vancouver-based Wishpond Technologies reported record revenue at $5.5 million for its third quarter 2022, up 38 per cent year-over-year, along with record positive adjusted EBITDA at $594,047 compared to $204,322 a year earlier.

The company, which has an “all-in-one” platform combining services including marketing, promotion, lead generation, referrals and sales automation for the SMB sector, also saw positive cash flows from operations at positive $670,595 compared to negative $134,219 for last year’s Q3.

Wishpond Chairman and CEO Ali Tajskandar said with the strong balance sheet and cash flow the company is likely to be able to invest in organic and inorganic growth without having to raise capital.

“As part of a cost reduction initiative launched in Q2-2022 to drive profitable growth, Wishpond continued to scrutinize all new expenditures with the intent to optimize operations and achieve cost-saving synergies. As a result, the Company was able to achieve record positive cash flows from operations and record positive Adjusted EBITDA in Q3-2022,” Tajskandar said in a press release.

Upadhyaya said WISH’s $5.5 million in revenue was in-line with his forecast at $5.5 million and the consensus estimate at $5.6 million, while the “massive beat” on adjusted EBITDA saw WISH’s $0.6 million well ahead of iA Capital’s and the Street, both at $0.1 million.

“Management has been extremely diligent regarding OpEx spend across the board and has taken a disciplined approach to growth whilst still growing at 30 per cent-plus organic growth rates,” Upadhyaya said.

Looking ahead, the analyst is expecting a robust fourth quarter from Wishpond but with likely a less pronounced revenue uptick, as he is assuming management will continue to focus on sustainable growth. Upadhyaya is now calling for $6.2 million in Q4 revenue and $0.7 million in adjusted EBITDA.

On M&A, Upadhyaya said Wishpond is likely to start engaging in further conversations in the latter half of next year as it builds up its dry powder through strong EBITDA margins and positive free cash flow.

On the stock, Upadhyaya said WISH is still trading at a discount to its peers.

“We believe WISH’s shares continue to be undervalued, trading at just 1.5x our 2023 estimates compared to its Canadian SaaS comps trading at 5.6x,” he said.

With his maintained “Buy” rating on Wishpond, Upadhyaya also reiterated a $1.50 target price, which at press time represented a projected one-year return of 80.7 per cent.

Disclosure: Wishpond Technologies is an annual sponsor of Cantech Letter.

Below: Cantech Letter’s recent interview with Wishpond CEO Ali Tajskandar…