Boardwalktech keeps “Speculative Buy” rating at Echelon

Following the company’s most recent quarterly results, Echelon Capital Markets analyst Mike Stevens has trimmed his price target on Boardwalktech Software (Boardwalktech Software Stock Quote, Chart, News, Analysts, Financials TSXV:BWLK)

ON August 24, BWLK reported its Q1, 2024 results. The company posted Adjusted EBITDA of negative $500,000 on revenue of $1.55-million, a topline that was up three per cent over the same period last year.

“Growth exiting Fiscal Year 2023 continued into the first quarter of this year, as the Company recorded a new historic high in recurring revenue licenses, both from new and existing customers, further demonstrating our ‘land and expand’ strategy. Our ARR is approaching $6 million and continues to grow each quarter,” said CEO Andrew T. Duncan. “We continue to build on and replenish our pipeline, adding new prospects in both the enterprise sector and via our teaming partners in the global banking and financial services channel. Exiting the summer, we have been experiencing a notable pick up in both new engagements and even customer re-engagements. Thus, we expect to close incremental deals with new enterprises and financial services companies in the months ahead. The Boardwalktech low code digital ledger platform continues to gain traction with these enterprises, especially in supply chain, as it seamlessly solves the many problems associated with structured and unstructured data delivering improved visibility and decision making along with outstanding results and ROI.”

In a research update to clients August 28, Stevens explained why he has lowered his price target on BWLK (The analyst has maintained his “Speculative Buy” rating).

“With macro challenges still swirling, impacting both the Company’s ability to convert pipeline prospects into contracted clients along with investor sentiment and appetite for unprofitable microcap growth stocks, we are trimming our PT from C$1.15 to C$0.85 (still implying ~67% of upside),” the analyst said, “With the PT trim, we are also trimming our forecasts due to what we believe will be a slower ramp in realized revenues throughout the remaining 7+ months in Boardwalk’s F2024. We are also increasing our DCF valuation’s discount rate to 16% (from 15%) and our terminal EV/EBITDA multiple to 7.5x (from 8.5x) to reflect the referenced challenges, resulting in a DCF valuation of C$0.85. That being said, we look for Boardwalk to demonstrate momentum in FH224 closing deals and setting the stage for a strong FQ424 (where we forecast ~46% y/y Software subscriptions and services growth) and F2025 (beginning April 1, 2024).”

Stevens now thinks Boardwalktech will post EBITDA of negative $1.4-million in revenue of $7.3-million in fiscal 2024.