Wishpond will help you beat the market, Beacon says

Toss another coin in the wishing well for Wishpond Technologies (Wishpond Technologies Stock Quote, Charts, News, Analysts, Financials TSXV:WISH) after the marketing tech company just chalked up its sixth acquisition. Beacon Securities analyst Gabriel Leung commented on the pickup in a Wednesday note to clients, where he reiterated a “Buy” rating on the stock and $2.00 target price, good for a 12-month projected return at the time of publication of 264 per cent.

Vancouver-based Wishpond, a SaaS provider of marketing-focused online business solutions, announced on Wednesday the acquisition of Wilmington, Delaware-based Essential Studio Manager LLC (ESM), a provider of business management software for tasks such as invoicing and CRM.

With over 150 customers, ESM works on a monthly subscription basis with its clients representing small, services-oriented businesses across a number of industries.

“We’ve begun to look at new tuck-in acquisition opportunities once again, and we are really excited about adding ESM as it furthers our mission to help small businesses grow and succeed,” said Wishpond Chairman and CEO Ali Tajskandar in a statement.

“ESM has built a comprehensive suite of complementary business productivity solutions which we believe our customers will derive tremendous value from as part of Wishpond’s product offering,” he said.

Leung said with no financial details provided on the acquisition, the implication is that it’s a relatively small transaction.

“Overall, we believe ESM’s business productivity tools represents a good complement to Wishpond’s all-in-one, digital marketing platform,” Leung wrote.

“Recall that Wishpond has over 4,000 customers, which offers healthy cross-sell opportunities for the ESM platform,” he said. “We are maintaining our full year estimates on the back of today’s ESM acquisition.”

Leung is forecasting Wishpond’s net revenue to go from $20.5 million in 2022 to $25.7 million in 2023 and to $31.8 million in 2024, while on adjusted EBITDA, the analyst is expecting a move from $0.6 million in 2022 to $1.4 million in 2023 and to $2.1 million in 2024.

Leung said his $2.00 target is based on a 3.5x multiple of his 2024 EV/Sales estimate. 

Last month, Wishpond reported its fourth quarter 2022 financials, which featured record quarterly revenue of $5.9 million, representing a 27 per cent year-over-year increase, and record positive adjusted EBITDA at $687,000 compared to $491,000 a year earlier.

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