Desjardins Securities analyst Gary Ho sees a “tremendous growth runway ahead” for PowerBand Solutions Inc. (PBX-X).
Touting the potential stemming from the “massive” U.S, auto and auto financing industries and eXpecting it to benefit from a “first-mover advantage and several notable barriers to entry,” he initiated coverage of Burlington, Ont.-based fintech provider with a “buy” recommendation on Tuesday.
“We are positive on the PBX story for several reasons. (1) Meaningful value proposition for dealer customers in an untapped used vehicle leasing market; DF [Drivrz Financial] products appeal to dealerships while providing greater profit potential; (2) market adoption, greater customer awareness and scalability benefits should drive meaningful near-term growth; (3) considerable market opportunity — at a mere 2-per-cent market share, PBX could become a $2-billion enterprise value company; (4) benefits from first-mover advantage and several notable barriers to entry; and (5) no inventory or credit risk exposure,” he said.
“Potential catalysts to watch for (1) Launch of DL and DX should enhance growth in 2022 and beyond; (2) improving vehicle inventory and dealer adoption should result in a ramp-up in lease originations; and (3) potential uplisting or senior U.S. listing should broaden investor base over time.”
Mr. Ho, currently the lone analyst covering the stock, set a target of $1.60 per share. It closed at 72 cents on Monday.
“Our investment thesis is predicated on: (1) increasing dealer adoption and better inventory situation should result in an acceleration of originations; (2) limited competition in an untapped used leasing market presents a massive growth opportunity; and (3) an asset-light model with zero inventory or credit risk exposure,” he said.