Tangoe: Investor Sentiment Is Expected To Rebound In 2H14 If Growth Accelerates, Says Roth Capital
In a research report issued today, Roth Capital analyst Richard Baldry reiterates a Buy rating on Tangoe (NASDAQ:TNGO) with a $25 price target, following the company’s recent SEC filings.
Baldry wrote, “A closer look at Tangoe’s SEC filings has enabled us to build a new model that explicitly breaks out organic versus inorganic revenues for the past eight quarters. The data makes it clear to us that while acquired revenues have been subject to above average attrition as we expected, organic growth has remained healthy over the past two years, ranging between 20-30% yr/yr.”
The analyst continued, “Tangoe shares trade at 2.4x run-rate revenues (net of cash), more than a 50% discount to its 5.4x peer average. With shares down nearly 50% from highs despite record 2Q14 revenues and EPS, we expect investor sentiment to rebound in 2H14 if growth accelerates as we forecast and as implied by guidance. We see a move toward a peer multiple over time, but our $25.00 target price assumes a still peer-discounted 4x revenue multiple (and adds estimated cash reserves) applied to our year-out 2Q15 run-rate revenue forecast. Given the upside we see, we reiterate our Buy rating. Factors that could impede shares of TNGO from achieving our price target include competition with incumbent vendors, acquisition integration risks, hiring challenges and managing investor expectations as a fairly young public company, among other factors.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Richard Baldry has a total average return of 10.0% and a 62.5% success rate. Baldry has a -37.3% average return when recommending TNGO, and is ranked #1057 out of 3284 analysts.