Quarterhill is still undervalued, this analyst says

In his Sept. 24 update Beacon Securities analyst Gabriel Leung said Quarterhill’s (Quarterhill Stock Quote, Chart, News, Analysts, Financials TSX:QTRH) new U.K. traffic signal detection registration supports the company’s international growth thesis.

Leung reiterated his “Buy” rating and $5.50 target on Quarterhill. His target is based on 11 times his calendar 2028 EV/EBITDA estimate and assumes the Conduent tolling business acquisition closes around the end of calendar 2026.

Quarterhill announced that its proprietary multilane intersection radar, TMB-13X, received TOPAS 2505B registration, a requirement for traffic signal detection technology deployed in the United Kingdom.

The product is part of Quarterhill’s Advanced Traffic Management portfolio and is designed for complex multilane intersections.

Leung said TMB-13X gives traffic authorities an above-ground alternative to traditional inductive loop detection, reducing roadwork, installation costs and traffic disruption tied to in-road sensors.

The product can monitor vehicles and cyclists across multiple lanes and uses up to nine configurable virtual detection loops based on speed, direction, movement and presence.

Leung said inductive loop detection remains the dominant traffic management technology, but it is costly and intrusive to install or repair because roads must be cut or dug up.

“We also view today’s news as supportive of our thesis that the company will increasingly look to the international markets to accelerate its growth profile, not just for its Advanced Traffic Management portfolio, but also its Tolling Solutions and Safety & Enforcement solutions,” Leung said.

International markets currently account for less than 10% of Quarterhill’s revenue.

Leung said the pending acquisition of Conduent’s tolling solutions business also brings a U.K. presence, supporting Quarterhill’s international growth plans.

The analyst expects the next catalyst to be either the close of the Conduent tolling business carve-out or Q3 results.

For Q3, Leung is modelling revenue of US$41.7-million and EBITDA of US$4.1-million, compared with consensus at US$42.4-million and US$4.3-million.

Leung expects Quarterhill to generate Adjusted EBITDA of US$14.9-million on revenue of US$163.2-million in fiscal 2026, improving to Adjusted EBITDA of US$41.0-million on revenue of US$401.0-million in fiscal 2027.

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