Did everyone forget that Quarterhill forecast that ITS earnings are going to remain at q4 levels in 2022?
That is a 50% reduction to consensus. If you apply Cannacord's model to 2022 earnings you get a $2.00 price target. That is WITH signing Apple and Selling WiLan together for $200Million. At todays price of $2.30, you are assuming they get $250 million. Far too high.
Corp: (1.08)
Debt: (0.55)
Cash: + 0.70
Apple signing: + 0.63
Sell WiLan: + 0.68
SUBTOTAL: $0.38 / share (that's it without ITS)
ITS:
2022 earnings (16M @ 12 X EBITDA): $1.62/share
TOTAL: $2.00
Now Cannacord provided a $2.75 target because they generously used 2023 Earnings, with $24M EBITDA.
Did no one realize that the average consensus earnings for 2023 ITS EBITDA was $52million.
Analysts have cut their 2023 estimates by MORE THAN half.
Apple is a drop in the bucket vs. the huge value destruction from the ITS underperformance from supply chain and wage inflation.
No Q1 financials. No idea what Apple is worth. ITS at less than half of expectations. Cannacord is right on the money.
At $2.30 today... you need to sell WiLan and get an Apple signing for $250 million. And need to increase ITS earnings and margins in an inflationary environment.
All you get is a 15% return on investment until the end of 2023 or 7% / year. Doesn't seem a great risk/reward setup.