From Scotia this Morning Target $2.90Quisitive Technology Solutions, Inc. Cloud takes the lead; Payments to catch-up
OUR TAKE: Positive.
We are off restriction on Quisitive and wanted to provide an update on QUIS progress thus far and some of the recent announcements made by the company. Key highlights for this report include Quisitive’s acquisition of Catapult Systems, LLC (“Catapult Systems” or “Catapult”), recent Bought Deal Offering, update on LedgerPay platform and Q3/21 Earnings Preview. We continue to maintain our Sector Outperform rating on the stock and $2.90/sh price target.
KEY POINTS
Quisitive recently announced the acquisition of Austin, Texas-based Catapult Systems, a Microsoft-focused digital solutions and services provider, from Chinasoft International Limited (“Chinasoft”) on Nov 8, 2021 for US$51.5 million. Established in 1993, Catapult Systems specializes in digital transformation and cloud-based solutions. As per the management, Catapult strengthens Quisitive’s Global Cloud Solutions platform and aligns with the company’s vision to become the premier, global Microsoft solutions provider for cloud innovation. In the words of David Totten, CTO US Partners at Microsoft, “the problem-solving committee just doubled in size”. Alongside the acquisition announcement, the company also announced a new Bought Deal Offering (“Offering”) of 33,340,000 common shares at C$1.20 per share with a 15% over-allotment option. The net proceeds from the Offering will be used to partially fund the acquisition, with the balance to be funded through a US$15 million drawdown from the accordion feature of the Credit Facility and cash on hand.
LedgerPay continues to be one of the key management priorities alongside the growth of Global Cloud Solutions and the BankCard business. We had an opportunity to connect with management on LedgerPay platform and its progress towards commercialization. As per the management, while some of the key milestones including Bank Sponsorship and the PCI audits have been attained, the company continues to work with Visa/Mastercard to complete endpoint network certifications.
However... Quisitive is scheduled to release its third quarter 2021 earnings on Monday, November 22, 2021. The conference call has been scheduled for 4:30 p.m. Eastern time (1:30 p.m. Pacific time) (Dial-in details: 1-800-319-4610; 1-416-915-3239). We expect a solid quarter with y/y Revenue growth estimated at ~111% driven by the company’s organic growth coupled with recent Mazik Global and BankCard acquisitions. As per our estimates….