CanBanc Income Corp CKNBF

RE: BMO Still High on CIC......TD too

[frugal18]

John, thanks for the info. Attached please find a recap or Td's latest report (they still have a buy with $8.5 target) I listened to the conference call, and watched yesterday's ROB interview as well. I have a feeling that many of the analysts thought that the lump sum payment at the end of October was "staged" to make the qtr. (remember they had an earnings warning ly) I am pleased that Mckinnon was basically saying they would make the year by reitterating they were on target to meet their "internal goals" Looks like a lot of tax loss selling since we've gone down since the beginning of the year Outlook Our estimates remain largely unchanged. We are forecasting revenue growth of 52% in each of fiscal 2007 and fiscal 2008. As royalty revenue grows (about 40% of normalized revenue is recurring) we see significant operating leverage – we forecast break-even EPS this year and $0.18 for fiscal 2008. Valuation Certicom currently trades at an EV/LTM sales multiple of 8.6x and an EV/FTM sales multiple of 6.2x. This compares to our IP peer group median multiple on forward sales of 5.6x (range of 3.1x-12.3x). We expect Certicom to grow revenue at a CAGR >50% over the next two years, versus peer median expected growth of 14%. Justification of Target Price Noting that our IP peer group’s current median forward P/E (taxed) is 38x, we believe Certicom should trade at least in line, given: 1) Certicom’s longer period of patent protection (earliest patent expiration is 2015); 2)arguably broader vertical reach (companies in its IP peer group are primarily semiconductor-based); 3)arguably stronger legal footing (with endorsement from the NSA); and 4) relatively higher forecasted growth. We arrive at our C$8.50 target price using the high end of our untaxed range of 25x-30x our estimated earnings power calculation for fiscal 2008 (using 35% EBITDA – the peer median margin – on fiscal 2008 revenue yields $0.26 in EPS).