With a catalyst-rich year ahead, Vancouver-based marketing tech company Wishpond Technologies (Wishpond Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:WISH) should be on every tech investor’s wish list. That’s according to PI Financial analyst Jason Zandberg, who reiterated a “Buy” rating on the stock in a Thursday report while increasing his target price from $1.50 to $1.75 per share.
Wishpond has a SaaS-based suite of tools for small to medium-sized businesses, covering marketing, promotion, lead generation, ad management, referral marketing and sales conversion capabilities. The company recently launched Propel IQ, its all-in-one marketing solution that combines Wishpond’s software with that of recent acquisitions to create an integrated platform.
The stock has been mired in a slump over the past year, trading below where it began as a public company in December 2020. Now within the $0.60-$0.80 range, WISH has a lot to offer for investors, Zandberg said, including a growing, diversified customer base.
Currently with over 4,000 customers, Wishpond covers segments like e-commerce (25 per cent of its customers), B2B (19 per cent) and service providers (19 per cent). Meanwhile, the company is expecting to generate 30 to 40 per cent organic growth in 2023, Zandberg said in his Thursday coverage transfer.
“We see a number of catalysts for the Company over the next year including future acquisition potential, further AI development in its product suite, and lastly WISH’s strong track record for growth,” he wrote.
As for inorganic growth, Zandberg noted that Wishpond has acquired five companies since going public and each of them has contributed to WISH’s full-service marketing platform. The analyst said we can expect more M&A as market conditions improve.
At press time, the analyst’s $1.75 target represented a projected one-year return of 185 per cent.
“Based on our new valuation methodology, we are increasing our one-year target to $1.75 (previously $1.50). On a multiple basis, our $1.75 target price equates to an EV/Sales of 0.9x and 0.7x on our FY23 and FY24 estimates, respectively. SAAS peers currently trade at an average EV/Sales multiple of 4.9x based on FY24 revenue estimates,” Zandberg said.
Wishpond is expected to deliver its fourth quarter 2022 results on April 13, and Zandberg is estimating revenue of $5.5 million and adjusted EBITDA of $0.6 million. Further afield, Zandberg is forecasting full 2023 revenue and adjusted EBITDA of $26 million and $2 million, respectively.
“We expect the Company to continue to have positive EBITDA moving forward, but we expect investment in future growth will take priority over maximizing near-term EBITDA. Our FY24 EBITDA estimate of $3.7 million represents and EBITDA margin of 11 per cent, but we believe the longer term margin will approach 35 per cent,” he wrote.
Disclosure: Wishpond Technologies is an annual sponsor of Cantech Letter.