Virtus Advisory Note on Haywood ReportCommentary: Haywood Releases Primer on Clarocity Corporation (TSXV:CLY)
Monday afternoon, Haywood Technology Analyst Pardeep Sangha released an in-depth report covering Clarocity Corporation. While the report itself does not contain a price target on the stock, it does contain valuable information regarding valuation and a discussion as to why he is bullish on the company’s prospects. Below, we take some highlights from the report for your convenience:
· Projected full year revenue of $16 million and $26 million in 2017 and 2018 respectively
· Currently trading at 1.3x 2018 EV/Sales where comparables are trading at 5.5x EV/Revenue CY18
· Recommended steps to clean up the balance sheet:
o Reduce the number of warrants
o Convert a significant amount of debt to equity
o Find a third-party debt lender to assume majority of remaining debt
o Roll back the number of shares outstanding
o Conduct an equity financing
We believe his recommended steps, the first of which is already in action with a proposed vote for September 14th, will significantly clean up the balance sheet. Furthermore, Mr. Sangha recommends completing these steps over the next six months, a promising sign for shareholders that things are expected to move relatively quickly.
As expressed by management many times, cleaning up the balance sheet is critical to getting existing clients to quickly ramp up spend with Clarocity. Should the company manage to convert a large portion of its debt into equity and receive a solid amount of cash to be used for working capital, management expects that large Government Sponsored Entities (GSEs) will be able to quickly increase their spend. Ultimately, these catalysts have the potential to increase revenues faster than anticipated by the Haywood report.
Based on this report and managements expectations, we believe Clarocity is primed to take advantage of a huge market opportunity. It is well known within the industry that MVPro, the company’s leading alternative appraisal solution, is quickly gaining traction in the industry as the go-to alternative appraisal tool and now it is simply matter of continuing to execute. We look forward to continuing to update our readers with important news out of the company going forward.
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The information and recommendations made available here through our emails, newsletters, website, press releases, collectively considered as (“Material”) by Virtus Advisory Group Inc. (“Virtus” or “Company”) is for informational purposes only and shall not be used or construed as an offer to sell or be used as a solicitation of an offer to buy any services or securities. Virtus does not guarantee the accuracy of the information provided in its Material. You hereby acknowledge that any reliance upon any Materials shall be at your sole risk. In particular, none of the information provided in our monthly newsletter and emails or any other Material should be viewed as an invite, and/or induce or encourage any person to make any kind of investment decision. The recommendations and information provided in our Material are not tailored to the needs of particular persons and may not be appropriate for you depending on your financial position or investment goals or needs. You should apply your own judgment in making any use of the information provided in the Company’s Material, especially as the basis for any investment decisions. Securities or other investments referred to in the Materials may not be suitable for you and you should not make any kind of investment decision in relation to them without first obtaining independent investment advice from a qualified and registered investment advisor. You further agree that neither Virtus, its employees, affiliates consultants, and/or clients will be liable for any losses or liabilities that may be occasioned as a result of the information provided in any of the Company’s Material. Virtus is not registered as an adviser under the securities legislation of any jurisdiction of Canada and provides Material on behalf of its clients pursuant to an exemption from the registration requirements that is available in respect of generic advice. In no event will Virtus be responsible or liable to you or any other party for any damages of any kind arising out of or relating to the use of, misuse of and/or inability to use the Company’s website or Material. The information is directed only at persons resident in Canada. The Company’s Material or the information provided in the Material shall not in any form constitute as an offer or solicitation to anyone in the United States of America or any jurisdiction where such offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation. If you choose to access Virtus’s website and/or have signed up to receive the Company’s monthly newsletter or any other Material, you acknowledge that the information in the Material is intended for use by persons resident in Canada only. Virtus is not an investment advisory, and Material provided by Virtus shall not be used to make investment decisions. Information provided in the Company’s Material is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. Virtus and/or its principals and employees may have positions in the stocks mentioned in the Company’s Material, and may trade in the stocks mentioned in the Material. Do not consider buying or selling any stock without conducting your own due diligence and/or without obtaining independent investment advice from a qualified and registered investment advisor.