TeraGo's (TeraGo Stock Quote, Chart, News: TSX:TGO) Q1 revenue came in softer than he expected, but PI analyst Pardeep Sangha still thinks the company is undervalued. Yesterday, TeraGo reported its first quarter results. The company lost $16,000 on revenue of $12.2-million, down 5% from the same period last year. "TeraGo made great strides in the quarter on our transition to an end-to-end data solutions provider," said CEO Stewart Lyons. "We've had great success securing larger deals, having sold out our downtown Vancouver data centre to one large Tier 1 customer, and we have landed several large cloud opportunities with the help of our RackForce acquisition. As we transition from a product sale to a solution sale, our signed backlog has grown significantly and we look forward to seeing the benefit in our results in the back half of the year." Sangha notes that TeraGo's first quarter results do not include revenue from the company's $33-million acquisition of Rackforce Networks. He thinks that acquisition "significantly" boosts the company's data centre and cloud services business. He expects that this part of the company's business will climb to 25% from just 6% prior to the pickup. The analyst says the acquisition effectively changes TeraGo's comparables. "We believe TeraGo is currently undervalued at an EV\/Sales multiple of 2.2x and an EV\/ Adj. EBITDA multiple of 7.4x our FY15 estimates. This is in line with the large telecom service providers peer group, but below the datacenter and cloud services providers peer group," said Sangha. In a research update to clients today, Sangha maintained his "Buy" rating and one year target of $11.00 on TeraGo. Sangha characterizes the risk on the stock as "Speculative".