Stifel initiates coverageFrom the Globe&Mail yesterday
Analyst seems rather upbeat about MAGT. Globe&Mail
October 19, 2022
In a research note titled Data is the new smoking gun, Stifel analyst Suthan Sukumar initiated coverage of Magnet Forensics Inc. (MAGT-T), calling it a “proven market leader well positioned for continued share gains” and touting its “highly defensive model but strong structural tailwinds suggest upside potential ahead.”
“MAGT is disrupting the digital forensics industry with a next-gen platform that is modernizing the current digital investigation workflow which remains slow, siloed and ripe for transformation,” he said. “Amidst the ongoing proliferation of data and devices, with digital evidence now in more than 90 per cent of criminal cases, combined with the rising scale and complexity of cybercrimes, we see MAGT as well positioned for greater share gains in both its core public sector market and an emerging enterprise market, providing a long runway for strong growth and continued profitability as the company transitions from a Rule of 40 profile to a Rule of 50. With unique pure-play exposure to cybersecurity, an important secular theme, we believe MAGT should be viewed as a core holding in Canadian Tech and see the current share price as an attractive buying opportunity.”
Mr. Sukumar set a target of $40, exceeding the average on the Street of $37.72.
“MAGT trades at 5 times fiscal 2023 estimated Revenues, a material discount to cybersecurity and comparable Rule of 40 software peers, at 8 times and 10 times, respectively, despite stronger growth and EBITDA profitability with FCF support, which should merit higher multiples, in our view,” he said. “Ongoing, disciplined execution on penetrating the largely greenfield enterprise market and sustained wallet share gains in the established public sector should drive a continued balance of strong growth and profitability, driving multiple expansion towards peers.”