M Partners met with Brett Kidd. Here are the key points. They raised target this morning after the meeting.
Key points:
- Blackberry transaction was done at 6X TTM revenue. Implies WiLan could be worth $280M. They have it modeled at $230M underpinning the $4.25 target. Implies a $4.75 target price if achieve BlackBerry multiple.
- Raise 2022 ITS revenue to 212M and EBITDA to $31M based on the recent wins. The two deals added $25M in annual revenue.
- Kidd implied that there are two large additional contracts in the near term pipeline. Once those are announced M Partners will raise targets further.
- Estimate ITS will represent 80% of revenue. Believe investors seeing this will be a crucial step in rebranding Quarterhill as an ITS business.
- Model Sale of WiLan and Apple proceeds to provide more than $400M of capital in addition to $80M on the balance sheet to fund an aggressive M&A agenda.
- Believe it is significantly undervalued trading at 8X EBITDA.