Clarus Securities Inc. 2012. Doc .85 -..91 cents Leading the Revolution in Mobile
Advertising
We are initiating coverage with a Buy recommendation and a 12-
month target price of
.85 per share.
• ISD offers investors a way to play the rapidly expanding
mobile advertising space. ISD is the leader in proximity
marketing solutions, which provide retailers the ability to push
coupons and in-store information directly to phones via
Bluetooth and Wi-Fi. The Company has won its first
deployment with Couche-Tard across 1,435 Mac’s stores in
Canada.
• Proximity-based marketing is the holy grail of mobile
advertising. We believe proximity solutions will ultimately
beat location-based models (like Foursquare) given they can
provide relavant information to targeted customers.
• We expect retailers will begin deploying ISD’s solution over
the next 12 months, supporting our forecast. We believe
investors should buy the stock ahead of potential
announcements.
• OEM partnerships could accelerate growth beyond our
forecast. ISD has partnered with digital signage equipment
manufacturer AOpen, retail kiosk designer Skipton and pointof-
sale distributor SelectCore to integrate ISD’s solution into
their products.
• Our
.85 price target is based on a DCF, discounted at
13%. As new customers are added ISD should benefit from
positive operating leverage. In the future we believe the
company will be valued using a P/E multiple. Currently the
comps are trading at 13x C2012. Assuming a similar multiple
on our F2014 (year end April) EPS
EPS estimate of
.07 would
support a price target of
.91.