The stock ended 2022 in the red, but investors can expect better results this year from Wishpond Technologies (Wishpond Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:WISH). That’s according to iA Capital Markets analyst Neehal Upadhyaya, who nominated WISH as one of his two Top Picks in Technology for the year ahead.
“Wishpond remains undervalued despite 30 per cent-plus year-over-year organic growth, positive Adjusted EBITDA (about 11 per cent margins last quarter) and robust free cash flow,” said Upadhyaya in a Tuesday report.
Ad tech company Wishpond offers an all-in-one platform including marketing, promotion, lead generation, referrals and sales automation for the SMB space. The company reported revenue up 38 per cent year-over-year in its most recent quarter, Wishpond’s third quarter 2022, announced in November. Gross profit also rose 31 per cent to $3.6 million.
Upadhyaya said Wishpond has recently started bundling its packages, a move which has allowed it to charge a higher price as solutions become more integrated with a client’s marketing strategy. The result should be better customer retention rates and a higher ARPU for better gross margins, according to management.
WISH ended 2022 down about 48 per cent but saw its share price rise over the second half of the year. For Upadhyaya, the stock remains a “Buy” with a maintained target price of $1.50, representing a projected one-year return of 114.3 per cent.
“WISH is trading at just 1.3x our 2023 revenue estimates, well below its peer group average at 5.8x, presenting investors a strong entry point into the story, especially given that the company, unlike most other high-growth SaaS companies, is profitable, has a robust balance sheet and an unused credit facility of $6 million that will allow it to be opportunistic in the M&A market,” Upadhyaya wrote.
As for catalysts for the stock, the analyst pointed to upcoming quarterly results, larger customer wins and new product features launched. Upadhyaya said investors can expect WISH to accelerate hiring in sales, with strong organic growth prospects and a good chance at M&A.
“Although share price depreciation has made it difficult to execute accretive acquisitions, we believe the company will look to tap into its M&A pipeline as the share price improves to add material scale to its top line and/or fill any product gaps.
Disclosure: Wishpond Technologies is an annual sponsor of Cantech Letter.
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