Sylogist wins “Top Pick” status at Ventum

Despite a strong start to the year for the stock, Ventum Capital Markets analyst Amr Ezzat remains bullish on Sylogist (Sylogist Stock Quote, Chart, News, Analysts, Financials TSX:SYZ) for the second half of 2024.

In a research report to clients July 16, the analyst reiterated his “Top Pick” status, while maintained his “Buy” rating and price target of $12.50 on SYZ.

“Despite the strong double-digit performance in H1/24, up 35.7%, we uphold our belief that current market prices continue to offer an opportunity to consolidate a position in a high-quality company that boasts high visibility and double-digit growth, Ezzat wrote. “Notably, the shares currently trade at 12.9x NTM EBITDA versus Canadian software peers’ median of 23.7x. We believe Sylogist is poised for a valuation re-rating with its newfound appetite for growth under a revitalized leadership team and board of directors (BOD) who are reshaping the business model after years of stagnation. Sylogist’s newly defined growth trajectory and aptitude for strategic M&A stand poised to act as key catalysts in driving revaluation.”

The analyst thinks SYZ will post EBITDA of $19.0-million on revenue of $72.8-million in fiscal 2024. He expects those numbers will improve to EBITDA of $24.9-million on a topline of $84.0-million in fiscal 2025.

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“We derive our valuation using a long-term DCF (discount rate: 11.0%, growth: 2.5%). SYZ currently trades at 12.9x NTM EBITDA (trough margins), a 41.8% discount from PowerSchool’s 22.2x NTM EBITDA takeout multiple, a 45.5% discount from the median 23.7x NTM EBITDA multiple Canadian software & high-visibility peers trade and a 65.2% discount from Tyler Technologies, Inc. trading at 37.1x NTM EBITDA,” the analyst concluded.