Mixed quarterly results are keeping analyst David Kwan of PI Financial on the sidelines when it comes to Baylin Technologies (Baylin Technologies Stock Quote, Chart, News TSX:BYL). Kwan issued an update to clients Friday in which he maintained his \u201cNeutral\u201d rating and $1.60 per share target, saying he needs to see more signs of a rebound in customer demand before becoming more constructive on the stock. Wireless technology management company Baylin Technologies delivered its Q1 on June 16, posting revenue for the three months ended March 31, 2020, of $26.9 million, down 31.0 per cent year-over-year, and adjusted EBITDA of $0.6 million compared to $4.1 million a year earlier. Management said lower revenue and gross margin were impacted by COVID-19 but also an unusually good Q1 in 2019 where Samsung awarded BYL several large \u201cone-time\u201d platforms. At the same time, Baylin reported a robust increase in sales orders and planning for the second half of the year, in particular in its mobile business which is seeing pent up demand due to the lockdown during the pandemic. \u201cThe higher quarterly revenue combined with the expense reductions implemented in the third and fourth quarters of 2019 and the further expense reductions implemented in March 2020, are expected to result in improved profitability for the balance of the year. One third of the March 2020 annualized cost reductions of $6.5 million were initially expected to be permanent, however, management now expects the permanent cost reductions will be closer to two thirds,\u201d said Baylin in the Q1 press release. On the quarterly numbers, Kwan had forecasted revenue of $28.5 million and EBITDA of $0.5 million, compared to the resultant $26.9 million and $0.6 million, respectively. In his report, the analyst noted Baylin\u2019s free cash flow was at negative $0.1 million, with the company ending the quarter with $54.8 million in net debt, up from $51.9 million at the end of the previous quarter (with the stronger US dollar playing a role). Baylin had breached its debt covenants in the Q1 but, as Kwan noted, the company and its bank lenders amended its credit agreements earlier in June, waiving compliance with the financial covenants for the first and second quarters with more accommodative covenants for the third quarter before returning to prior levels for the Q4 and beyond. \u201cBYL indicated all of its business lines are seeing increases in sales orders with a solid 2H FY20 expected that should also be aided by seasonality. Accordingly, management expects revenue in each of the remaining quarters this year to be higher than Q1, even despite another delay in the start-up of its new Vietnam facility (expected in Q4 versus Q1-Q2 FY20) due to ongoing airport closures delaying final work\/audits. Government subsidy programs should provide a notable tailwind to Q2 profitability while ongoing cost reduction initiatives should also help get BYL back on firmer financial footing,\u201d Kwan wrote. On the whole, Kwan rated the impact of the quarterly financials \u201cmodestly negative\u201d and has revised his forecast, calling for fiscal 2020 revenue of $134.8 million (previously $146.0 million) and adjusted EBITDA of $13.6 million (previously $14.8 million). Kwan\u2019s $1.60 per share target at press time represented a projected 12-month return of 49.5 per cent.