NowVertical Group has price target chopped at Ventum

On Sept. 12, Ventum Capital Markets analyst Rob Goff cut his target price for NowVertical Group (NowVertical Group Stock Quote, Chart, News, Analysts, Financials TSXV:NOW) to $0.65  from $0.90, while maintaining a “Buy” rating.

The revision follows weaker-than-expected second-quarter results and a shift to what he described as a “core baseline” outlook for 2025 and 2026.

“Lowered forecasts to reflect baseline trending supported moving our TP from $0.90 to $0.65,” Goff said. “We expect investors will await evidence of higher recurring revenue levels before the shares regain momentum.”

NowVertical, a Toronto-based data analytics and vertical intelligence software provider, reported Q2 revenue and Adjusted EBITDA of $8.2-million and $1.2-million, below Ventum’s forecasts of $10.5-million and $2.1-million, and down from $10.4-million and $2.5-million in Q1. A year earlier, Q2 revenue and EBITDA were $9.4-million and $1.5-million. Management attributed the softness partly to the delay of about $760,000 in Brazilian government contracts and noted that increased marketing spending is expected to build momentum into the second half.

Core analytics revenues of $7.6-million showed modest year-over-year growth against $7.4-million a year earlier. Roughly $1-million of the year-over-year revenue gap was tied to extended SaaS contract durations, which in 2024 had produced upfront accounting benefits but made 2025 comparisons more difficult.

“We had not fully recognized the impact of extending contract terms,” Goff said, adding that while longer terms add lumpiness, they provide more cash flow stability.

He characterized his revised outlook as a baseline scenario, reducing H2/25, 2025 and 2026 forecasts by $2.3-million/$0.9-million, $6.1-million/$1.0-million and $6.2-million/$1.4-million, respectively. He now projects fiscal 2025 revenue and Adjusted EBITDA of $37.1-million and $6.4-million, improving to $41.6-million and $7.9-million in fiscal 2026.

Despite the setback, Goff said NowVertical remains undervalued, with consolidated EV/EBITDA multiples of 5.1 times and 3.5 times on his 2025 and 2026 estimates. He pointed to execution on internal efficiencies, cross-selling and organic growth as key to restoring investor confidence, while leaving room for takeover speculation if performance lags.

“We look for strengthened core growth to support a positive revaluation,” he said.

Financially, NowVertical ended Q2 with $25.1-million in debt and $3.3-million in cash. Adjusting for $3.4-million in payables and $5.1-million in convertible debentures due Oct. 5, 2025, the company has $11.3-million in available resources. Working capital is expected to remain neutral through the second half.

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