This Canadian tech stock has an upside of 146%, analyst says

Beacon Securities analyst Gabriel Leung maintained a “Speculative Buy” rating and C$7.00 target on VerticalScope (VerticalScope Stock Quote, Chart, News, Analysts, Financials TSX:FORA) in a May 13 report after first-quarter results came in below consensus.

VerticalScope reported Q1 revenue of US$11.9-million and EBITDA of US$2.3-million, compared with Leung’s estimates of US$11.9-million and US$2.5-million. Consensus was US$12.8-million and US$3.9-million.

“On a positive note, we believe y/y comparisons should start to improve in Q2,” Leung said, noting direct advertising rose to 40% of digital ad revenue from 30% a year ago and programmatic CPM headwinds are easing…

Revenue fell 15% year-over-year, reflecting difficult comparisons in digital advertising and monthly active users. MAUs were 85.6-million, down from 104-million a year earlier, while ARPU improved slightly to US$0.045 from US$0.044.

“On a positive note, we believe y/y comparisons should start to improve in Q2,” Leung said, noting direct advertising rose to 40% of digital ad revenue from 30% a year ago and programmatic CPM headwinds are easing.

Leung said MAUs improved to about 90-million in March and continued trending higher in April and May. He also said recent Google AI Experience changes could become a tailwind for traffic.

VerticalScope generated US$2-million in unlevered free cash flow and ended the quarter with US$19.6-million in cash against US$44.6-million in debt. The company also began a cost-savings program expected to generate US$1.5-million in annualized savings.

Leung said data licensing discussions remain active, with management sounding more optimistic after blocking 275-million unauthorized LLM scraping attempts in Q1.

“Overall, we believe Q1 showed signs of continued progress with Q2 expected to further narrow the growth gap, leading to a potential return to modest y/y growth in H2 2026,” Leung said.

Leung expects VerticalScope to generate Adjusted EBITDA of US$18.5-million on revenue of US$55.6-million in fiscal 2026.

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