Tribe Property Technologies has a 303% upside, Eight Capital says

Following the company’s second quarter results, Eight Capital analyst Kiran Sritharan is maintaining his bullish take on Tribe Property Technologies (Tribe Property Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:TRBE).

On August 29, Tribe reported its Q2, 2023 results. The company posted Adjusted EBITDA of negative $2.2-million on revenue of $4.82-million, a topline that was up 11.3 per cent over the same period last year.

“I am very pleased with the second quarter results and the recently announced acquisition of Meritus Group Management Inc. in the Greater Toronto Area,” CEO Joseph Nakhla said. “Expanding our footprint in Ontario is a significant milestone for the Company. This is Tribe’s twelfth acquisition! We have established a successful track record of executing and integrating acquisitions to further accelerate the Company’s revenue growth. In addition, our organic growth profile remains stable, as we continue to experience a surge in community onboarding for management services and software usage, which we expect will result in a record total number of communities using our platforms and services. This year we are also fully dedicated to improving profitability by reducing costs and optimizing efficiencies within our operations. During the second quarter we implemented additional cost reduction strategies which included employing process improvements, cost optimizations, headcount reduction and consolidation of back-office systems. We expect these expense reductions will benefit Tribe’s financial performance in the second half of 2023. We remain excited about the Company’s growth prospects and continue to be committed to improving our profitability while increasing revenues and strengthening our market leadership position.”

The analyst gave his take on the quarter.

“Tribe reported an in-line Q2/23 alongside an acquisition in the Greater Toronto Area,” he said. “The print met expectations with EBITDA slightly behind, and subsequent to the quarter Tribe took further cost reduction measures intent on improving profitability. We like that the acquisition anchors Tribe’s footprint in the East, packages the complete property management solution, and adds strategic regional expertise. The outlook for H2/23 remains strong and increasing penetration of developers benefits cross-sell and mid-term growth prospects.”

In a research update to clients August 31, Sritharan maintained his “Buy” rating and one-year price target of $3.50 on TRBE, implying a return of 303 per cent at the time of publication.

The analyst thinks Tribe will post an Adjusted EBITDA loss of $7.2-million on revenue of $20.2-million in fiscal 2023. He expects those numbers will improve to EBITDA of positive $2.9-million on a topline of $26.2-million the following year.

“Despite the ongoing weakness in the broader real estate sector, management’s expectations for H2/23 remain healthy,” Sritharan added. “The key driver here remains the normalization and onboarding of the completed building backlog. Tribe noted that the industry shift to digitization has increased displacement opportunities, contributing to improved lead generation and conversion rates. Recent regulatory developments (Bill 91 passed) further benefit this trend.”

About Tribe Property Technologies (via Company handout)

Tribe is a property technology company that is disrupting the traditional property management industry. As a rapidly growing tech-forward property management company, Tribe’s integrated service-technology delivery model serves the needs of a much wider variety of stakeholders than traditional service providers. Tribe seeks to acquire highly accretive targets in the fragmented North American property management industry and transform these businesses through streamlining and digitization of operations. Tribe’s platform decreases customer acquisition costs, increases retention and allows for the addition of value-added products and services through the platform.

Disclosure: Tribe Property Technologies is an annual sponsor of Cantech Letter