Paradigm chops price target on Snipp Interactive

Following the company’s fourth quarter results, Paradigm Capital analyst Daniel Rosenberg has cut his price target on Snipp Interactive (Snipp Interactive Stock Quote, Chart, News, Analysts, Financials TSXV:SPN).

On April 30, SPN reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Gross Profit of $3.1-million on revenue of $8.0-million, a topline that was up 13% over the same period a year prior.

“We are thrilled with Snipp’s achievements throughout 2023,” CEO Atul Sabharwal said. “Our strategic expansion into new markets, the introduction of new business lines, and most importantly, our investments in our team, are all yielding results. This success is reflected in some of the new client solutions we launched last year, positive EBITDA results in the third and fourth quarters, and a growing bookings backlog comprised of new logo wins as well as existing customers.”

In a research update to clients May 2, Rosenberg maintained his “Buy” rating but cut his price target on SPN stock from $0.30 to $0.25.

The analyst thinks SPN will post Adjusted EBITDA of $200,000 on revenue of $23.5-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $600,000 on a topline of $26.5-million the following year.

Rosenberg explained the reasoning behind his new price target.

“We value Snipp using an EV/2025e revenue multiple of 1.5x (was 2.0x) and a DCF, resulting in our new C$0.25 target price (was C$0.30),” he wrote. “Our DCF utilizes a WACC of 12.0% and a terminal growth rate of 4%. Our comparable group consists of loyalty and marketing software providers, consumer analytics and advertising agencies. The group trades at an average 2.3x EV/2025e revenue while Snipp trades at 0.8x. Current price levels offer an attractive entry point into the evolving loyalty marketing space. We maintain our Buy recommendation.”