Sylogist Ltd.’s renewed focus on organic growth, M&A and improved investor relations will “lay the foundation for increasing support from investors and higher valuation multiples,” according to Acumen Capital’s Jim Byrne. Following a meeting with Bill Wood, the Calgary-based IT service management company’s new chief executive officer, he raised his rating for its shares to “buy” from “speculative buy.”
“In our view, SYZ has a well-established base business that is highly profitable,” said Mr. Byrne. “Investors had lost interest given slowing growth, lack of M&A, and previous issues with management compensation. A new leader with a solid track record of delivering growth should go a long way in improving the streets’ view of SYZ.
“We believe there are multiple opportunities for the company to deploy available capital, which exceeds $80-million, to reinvigorate the company’s growth profile. With the shares trading at a 65-per-cent discount to the peer group, there is considerable room for upside from current levels.”
He hiked his target to $16 from $13. The average on the Street is $13.25.
“We believe the current trading levels offer an opportunity for investors looking for a software company that is priced much lower than the eye-popping multiples of its peers all while delivering an attractive yield and strong profitability,” said Mr. Byrne.