AGM day… Cannacord cuts target to 2.50 and QTRH to HOLD What did I tell you? The company is currently priced for PERFECTION. Cannacord agrees.
They cut to a HOLD (which means SELL) and yes, and end of 2023 price target of 2.50. This is DEAD MONEY for the next 2 years at best.
And to get to the 2.50 estimate they had to raise the WiLan multiple to 7X from 6X previously. And they have ITS at the highest multiple in the ITS small cap industry at 12X.
$90M for WiLan implies 3X the price per patent vs Blackberry - accounting for the lower economic ownership share of partner patents.
PRICED FOR PERFECTION.
Happy AGM day.
(When this has happened before at other companies - on AGM day nonetheless - my bet is an equity raise is coming and Cannacord didn't get to participate)
......
We now rate Quarterhill a HOLD (from Spec Buy) as we review our sum-of-the-parts (SotP) valuation against recent positive share price movements following the Apple settlement / Q1 guidance. With this catalyst in the rear-view mirror, the focus for
the company returns to the ongoing strategic review of its WiLAN business, which
we continue to see as producing a wide range of potential outcomes. Note that we currently value WiLAN at ~$90M in our SotP valuation, though it remains unclear what amount of corporate overhead expenses would also be removed alongside a potential sale or through other cost reduction efforts. Using our current assumptions, the current share price suggests a reasonable valuation for the ITS business with current corporate overhead (~12x NTM+1 EBITDA). We are therefore moving our rating to a more neutral HOLD, pending clarity on these items. Our target price is now $2.50 (from $2.75) based on an updated SotP valuation.