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Target Price on Undervalued Tech Firm Suggests Potential 250% Gain
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This developer of cloud technology solutions and products is expected to continue double-digit organic growth and pursue inorganic growth strategies, noted an Echelon Capital Markets report.

Quisitive Technology Solutions Inc. (QUIS:TSX.V) is "undervalued against consolidated valuations" as it commercializes PayiQ, its rebranded payment solutions platform, reported Echelon Capital Markets Rob Goff in a July 6 research note.

Significant investment gain

Goff noted the U.S. company, a developer of cloud technology solutions and products and a Microsoft partner, is currently trading at CA$0.36 per share while Echelon's target price on it is CA$1.25 per share. This price difference represents a significant potential return of 252%.

"We see upside to baseline, consensus forecasts given the positive leverage of PayiQ as it first reduces its drain then turns EBITDA positive," Goff wrote. "Our CA$1.53 sum-of-the-parts valuation looks aggressive yet finds support in its valuation assumptions and peer transactions."

Echelon rates the Texas-based firm Speculative Buy.

Possible stock catalysts

In his report, Goff outlined what Echelon expects from PayiQ during the short and medium term.

As commercialization of the platform continues, Quisitive is expected to migrate BankCard merchants onto it as well as land new PayiQ clients. Revenue from migrations alone, Echelon estimates, could be as much as $4.5-5 million and could afford 85%-plus gross profit over the next two to three years.

"We continue to see the potential for Quisitive to acquire independent sales organizations at 10 times enterprise value:EBITDA or six to seven times adjusted for savings, upon migrating payments onto the PayiQ platform," Goff wrote.

Adding shareholder value

Overall, Echelon expects Quisitive to continue double-digit organic growth and restart efforts to grow inorganically through acquisitions. They could lead to Quisitive selling minority interests in some of its divisions, which, in terms of benefits, "holds the potential to crystallize value, establish currency for acquisitions and potentially engage a strategic partner."

"Over the longer term, accretive IT Services acquisitions are expected to add shareholder value as Quisitive leverages revenue synergies and scale efficiencies," Goff commented.

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  1. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
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