National Bank Financial - cantechletter.com By Nick Waddell Filed under: All posts, Analysts Stock: thnc THNC stock is undervalued, National Bank says
The company’s third quarter results are in the books and National Bank Financial analyst Richard Tse is still bullish on Thinkific Labs (Thinkific Labs Stock Quote, Chart, News, Analysts, Financials TSX:THNC).
On November 7, THNC reported its Q3, 2023 results. The company posted Adjusted EBITDA of $700,000 on revenue of $15.0-million, a topline that was up 13 per cent over the same period last year.
“We are now seeing the payoff from our decisive actions over the last 18 months, resulting in our best quarter as a public company,” said CEO Greg Smith. “The milestone of adjusted EBITDA profitability was reached alongside strong revenue growth and a productive period for our team, where we delivered key product updates that will set the stage for continued profitable growth in 2024. I’m pleased with the early interest and feedback from our customers and partners from recent product launches, including our mobile app solutions, AI tools, The Leap and valuable commerce tools. Our priorities remain steadfast on helping our customers succeed by making it easier to get started and earn their first dollar, providing tools that allow them to sell more, and supporting our larger customers’ goals on Thinkific Plus.”
Tse broke down the quarter, one in which he says the company exhibited capital discipline.
“Thinkific reported solid in-line FQ3 results relative to our and consensus expectations with revenue of $15.0 mln (vs. our $14.7 mln; Consensus $14.6 mln) and POSITIVE Adj. EBITDA of $0.7 mln (vs. our -$1.1 mln; Consensus -$0.9 mln) largely driven by the benefits of restructuring this past year resulting in an Adjusted EBITDA margin of 4.9% vs. -42.8% Y/Y.
In a research update to clients November 7, Tse maintained his “Outperform” rating and one-year price target of $3.00 on THNC, implying a return of 32.2 per cent at the time of publication.
Tse thinks THNC will post Adjusted EBITDA of negative $2.9-million on revenue of $58.8-million in fiscal 2023. He expects those numbers will improve to Adjusted EBITDA of positive $1.6-million on a topline of $66.5-million the following year.
“Bottom line, Thinkific remains uniquely positioned in its course creator / learning market with a notable growth runway that’s being fuelled in the short term by expanding ARPU via Thinkific Payments, growing GMV, and a scaling Plus (larger enterprise) segment,” the analyst concluded.