A Laurentian top pick for 2022 On Sylogist, the software company with enterprise resource planning solutions for the public sector, its share price has been up and down in recent years, finishing 2021 up nine per cent. But Agostino is calling for a better 2022 and has reiterated his “Buy” rating and $16.00 target price, which at the time of publication represented a projected 12-month return of 37.6 per cent.
Agostino said Sylogist is set up for key catalysts with a robust pipeline of acquisition targets complementing its organic growth prospects across all of its market segments. Agostino thinks that with a new management team the company is aiming to trade some EBITDA margin for faster sales growth where it’s targeting high single-digit organic growth while leveraging its IP innovation and plus-20-year relationship with Microsoft.
“Historically, the company has generated low single-digit organic growth with EBITDA margins recently exceeding 50 per cent. However, with a goal of remaining a ‘Rule of 40’ company, new management aims to deliver high single-digit organic growth through a modest increase in S&M spending and augmenting growth with $20–25 million in annual M&A-derived revenue, while maintaining EBITDA margins in the 30 per cent range,” Agostino said.
“As an indication of execution, having completed one year at the helm of SYZ, CEO Bill Wood has already acquired $17.7 million of incremental M&A revenue from three separate transactions, which should benefit forward revenue growth. We believe management’s successful execution should result in a higher multiple re-rating on growing estimates to reflect the company’s growth outperformance relative to peers,” he said.
excerpt from article on Cantech Letter site