The most accurate analyst has spoken: $2.00 target and HOLD Forecast risks remain elevated amid cost inflation and supply chain issues; Maintaining HOLD Investment Recommendation
We are maintaining our HOLD rating following Quarterhill’s Q2 results, which included a soft quarter from the ITS segment. The company has seen cost inflation and labour shortages continue to push large ITS project revenue into future periods. While these projects are seen as delayed and not lost, we have reduced our ITS estimates as a result. The outcome of the WiLAN strategic review process remains difficult to predict, and quarterly results remain highly volatile; We’d like to see improvement on both in order to recommend adding to positions. Our target price is reduced to $2.00 (from $2.50) as we roll forward our SotP model on lower expectations.
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There you have it, Doug has spoken. Your money gets eaten away by inflation. And you don't lose any more money if the following happen:
1. Macro issues quickly abate and there isn't supply chain or labour issues... as they note that achieving these forecasts rely on getting back to management's forecasts from 6 months ago (which were lies)
2. The $6M qtrly ITS loss turns into a $6M profit... By Q4
3. WiLan delivers $10M EBITDA in 2023.
4. There are no more special or one time charges
This is just to get to an end of 2023 price target of $2.00
The question is: what should the price of the stock be now to reflect these huge unknowns?