Quisitive Technology is a buy, Ventum says

Ahead of the company’s third quarter results, Ventum Capital Markets analyst Robb Goff remains bullish on Quisitive Technology Solutions (Quisitive Technology Solutions Stock Quote, Chart, News, Analysts, Financials TSXV:QUIS).

In a research update to clients September 30, Goff maintained his “Buy” rating and price target of $0.55 on QUIS, implying a return of 48.6% at the time of publication.

“We are taking the opportunity to confirm our bullish thesis,” the analyst wrote. “We view QUIS as attractively valued against baseline forecasts. We see the shareholder return profile significantly strengthened by the Company’s candidacy as a takeover within a consolidating market. We continue to forecast building strength across H2/24 where the Company’s mid-market exposure leaves it well-positioned to serve companies now looking for fuller cloud adoption as part of their preparation for AI-enabled tools and services. Companies that target large enterprise organizations face challenges when transitioning from on-premise solutions to cloud solutions at a later stage. We see the Company’s close relationship with Microsoft as a key factor where MSFT recently introduced broader partner incentives to accelerate AI adoption. We note that this program is effective October 1st and supplements the unique partnership incentives offered to QUIS as discussed with its Q2/24 results. Consequently, we see the positive macro factors supporting potential upside to consensus expectations for 2025 where revenue growth is currently at 8% (Ventum at 7%).”

Goff thinks QUIS will post EBITDA of $15.8-million on revenue of $120.9-million in fiscal 2024. He expects those numbers will improve to EBITDA of $17.1-million on revenue of $129.4-million in fiscal 2025.

The analyst says investors can feel comfortable taking a position at current levels.

“We see a limited downside in QUIS shares given their current valuation at 5.4x/4.4x 2024/25 EV/EBITDA and the FCF yields of 14%/16% (both adjusted for the preferred shares at $20M against their face of $27M). While operating momentum strengthens, we believe takeover considerations will limit downside risk while they offer a potentially significant positive catalyst,” he added.