Beacon Securities analyst Doug Cooper says NTG Clarity Networks (NTG Clarity Networks Stock Quote, Chart, News, Analysts, Financials TSXV:NCI) needs better visibility on collections, revenue and margins before he revisits his rating.
On Aug. 31, Cooper moved NTG to “Under Review” from “Buy.”
“Given the regional uncertainty and the lack of visibility on revenue and margins, we have moved the stock to Under Review until we get better clarity, which may come when the company reports its Q3/FY26 results at the end of November,” Cooper said.
NTG reported Q2 revenue of $20.1-million and Adjusted EBITDA of $5,560. Revenue was up 6.4% year-over-year but down from $21.3-million in Q1.
The company withdrew its fiscal 2026 guidance, which had called for revenue above $90-million and an Adjusted EBITDA margin of 13% to 16%. First-half revenue was $41.3-million, with an Adjusted EBITDA margin of 1.8%.
Cooper said uncertainty in the Middle East has delayed customer decisions, extended payment terms and pressured margins. NTG said Saudi Arabia’s weaker oil revenue and GDP decline have affected government and government-affiliated technology budgets.
NTG ended Q2 with $2.8-million of cash, down from $7.6-million at the end of March. Accounts receivable rose to about $36-million from $30-million, with receivables more than 90 days past due increasing to 13.5% of trade receivables from 0.6% in Q1.
Cooper noted the stock now trades below working capital value, suggesting the market is discounting the collectability of some receivables.
The company collected about $8-million after quarter-end and has announced $33.4-million of Q3 purchase orders to date, lifting backlog to more than $80-million.
Cooper said NTG’s near-term priorities are collecting receivables, converting order book to purchase orders and managing expenses against revenue and cash flow.
The analyst said cost cuts may be needed if the company does not return to growth.
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