With the hot money having moved elsewhere, Ottawa’s Espial (TSX:ESP) is currently suffering from low expectations. That means any surprise positive could spark a rally in the stock, says Mackie research Capital analyst Nikhil Thadani.
In a research update to clients today, Thadani maintained his “Buy” rating and one-year price target of $4.00 on Espial, implying a return of 95 per cent at the time of publication.
Thadani says Espial isn’t blameless in the current malaise that is its share price, but says those who have given up on the company might miss out on an upswing.
“With very low expectations, any potential positive catalyst could spark rally,” says the analyst. “Most investors have likely thrown in the towel on this stock given lack of positive news-flow since last summer and poorly communicated potential contract changes with Q3/15 results. The NAB industry show in Las Vegas this week could perhaps yield some positive news flow. We believe disclosing the yet un-named European customer, speculated by some to be NOS in Portugal could help further validate market demand for ESP’s solutions and aid stock price appreciation. We note ESP is a reseller for some NOS solutions since 2015and NOS is working on a 4K RDK Set Top Box.”
Thadani says the most likely positive is also a big one. He notes that German cable network operator Tele Columbus, with whom Espial recently announced positive results from a field trial, recently hosted an investor day that was highlighted by excitement for its Advanced TV offering. The analyst says this is the “firmest indication yet” that Espial could win this important customer.