RE:17 days left to prove $ !.50 value -V-G Another typo infested Astutein keyboard mash.
My downside is $1.10. Todd Coupland's downside is $1.00.
Cannacord's $2.50 target has ITS valued at $260 million, a 20% magical premium to the $150 paid for ETC and $63M paid for IRD. They are being very generous to put a premium on the highly paid purchased price.
Quarterhill paid $213M for assets that were worth $110M in the hands of previous owners. If you exclude the $20M acquisition premium for IRD and $90M for ETC, you end back at $110M for the ITS assets. That gets you actually below $1.50/share.
There was a HUGE acquisition premium paid for growth. If that doesn't materialize, then watch out below.
And this my friends is why the previous CEO must have been turfed. They were hustled into buying a renoflip, the auditors wouldn't easily sign off and then had to scramble and offer Apple a deal to help paper over the ITS mistakes.
For a $1.50 stock price post Q1, ITS earnings would need to decline to $2-2.5M / qtr vs the $4.3M /qtr estimated by analysts.
Now wouldn't that throw all of you for a loop. How could the stock crater after the big WiLan EBITDA? Well, 80% of the company valuation is now tied to 2 very simple numbers (1) ITS growth rate (2) ITS margin %. That's it. If there is a big miss on margin or growth, you will get a taste of what it is like to own a growth stock priced for flawless execution.
And Rekor and Itiris, in my view, foreshadow what to expect as they miss on revenue and margin.