A short report released last week concerning financial results stoked fears among Parateum (TEUM) investors, sending shares down 40% in just a few hours on Friday. But Monday, CEO Hal Turner addressed shareholders, stating “certain short-sellers have used questionable tactics, including leveraging the media to misrepresent facts and make anonymous spurious claims against the company and its officers,” which many felt was a strong defense against Friday’s drop, as shares rose 16%. But today, the stock broke down again, losing nearly 9%.
What’s next for Parateum stock? Northland Capital analyst Michael Latimore remains bullish, reiterating his Outperform rating on TEUM, with a $8.50 price target, which implies over 200% upside from current levels. (To watch Latimore’s track record, click here)
Parateum had a total of 243% organic growth in 1Q19, and Latimore sees these results growing significantly throughout 2Q with organic growth of over 100% for the rest of the year. The analyst estimates that the company should be able to do no less than 27% of pro forma organic growth. This shouldn’t be too difficult due to the fact that it was attainable in Q1 and Q2 is already on the right track.
Latimore is confident that Parateum’s acquisition integration has greatly improved the company’s prominence into organic growth. The analyst says the acquisitions “add scale,” and “would not be surprised if the number of deals launch by quarter increases throughout the year.”
An important factor of the acquisitions is the “increase [in] prospect for cross selling,” says Latimore. He continues, “a full mobility service sold to a WiFi customer more than doubles the revenue from that customer.” The company’s customer list numbers over 1,000, and includes large corporations such as Vodafone, Deutsche Telekom, ACN ($800 mil business, acneuro.co.uk). Given the size of these customers, different demand and types of services, have been fulfilled by acquisitions by Parateum.
Latimore thinks Parateum is in a good place to fill a void in the on-premises business and operations support systems market, given that “SaaS options in that space are limited…and the legacy vendors cannot migrate their outdated technology to the SaaS architecture smoothly.” Lattimore says, the company “has constructed a platform that is easy to consumer via APIs,” which further promotes buying on its platform.
All in all, Wall Street has not given up on Parateum just yet, as TipRanks analytics showcase the stock as a Strong Buy. Out of 5 analysts polled in the last 3 months, all 5 are bullish on TEUM stock. With a potential upside of 190%, the stock’s consensus target price stands at $9.00.
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