Paradigm raises price target on Sabio to $1.50

Following the company’s fourth quarter results, Paradigm Capital analyst Daniel Rosenberg has raised his price target on Sabio Holdings (Sabio Holdings Stock Quote, Chart, News, Analysts, Financials TSXV:SBIO).

On March 17, SBIO reported its Q4 and fiscal 2024 results. In the fourth quarter, the company posted Adjusted EBITDA of (All figures USD) $2.8-million on revenue of $18.3-million, a topline that was up 44%, year-over-year.

“Strong revenue growth, a leaner cost structure, and a strengthened balance sheet are enabling us to make growth-driving investments,” CEO Aziz Rahimtoola said. “Our recently launched performance marketing solutions enable brands to track direct impact on consumer behavior, capitalizing on the App Science™ platform’s unique AI-capabilities and rich combination of mobile device and ad-supported TV streaming data. In addition, our new App Science-powered programmatic offerings provide clients with greater control while making efficient use of our team. Combined with early traction in our international business and Creator TV’s focus on the valuable Gen Z demographic, Sabio believes it is well positioned to continue exceeding industry growth rates while tightening Adjusted EBITDA1 margins. As ad-supported streaming continues its rapid uptake, we’re looking forward to producing extraordinary results for a growing number of the world’s top brands.”

Rosenberg assessed the fourth quarter results.

“Sabio reported positive Q4 results that were at the top end of preliminary guidance,” he wrote. “The company’s positioning in political and advocacy spending was a benefit and investment in international markets is showing early signs of success. Sabio is achieving profitability targets and seeing strong operating momentum into 2025. Management expects doubled digit growth to continue in 2025.”

In a research update to clients March 18, the analyst maintained his “Buy” rating and raised his price target on the stock from $1.25 to $1.50, implying a return of 124% at the time of publication.

The analyst thinks the company will post Adjusted EBITDA of $4.4-million on revenue of $54.3-million in fiscal 2025. He expects those numbers will improve to Adjusted EBITDA of $4.7-million on a topline of $58.8-million in fiscal 2026.

“We value Sabio using a 1.8x EV/net revenue multiple on our 2026 forecast,” Rosenberg added. “This results in our new target price of C$1.50 (C$1.25 prior). Our comparable peers consist of AdTech players who trade at a median of 2.8x 2025e net revenue while Sabio currently trades at 0.7x. We think Sabio is poised for a strong 2025. While the company benefited from strong political spending this quarter, the core business continues to trend well. We continue to see Sabio growing ahead of industry rates given a differentiated CTV offering that is gaining wallet share with marquee clients.”

Disclosure: Sabio is an annual sponsor of Cantech Letter