The unique functionality of big data Cloud technology firm Rosslyn Data Technologies’ (LON:RDT) platform is a strong selling point, broker Cenkos believes.
In the increasingly crowded Cloud, Rosslyn’s RAPid processing engine allows non-techies to create their own business rules when extracting and analysing wodges of data, which reduces the burden on information technology professionals and puts the power in the hands of users who understand the data.
Rosslyn’s house broker goes on to say that the company’s reach is extending now that it has established credibility with a number of value-added resellers.
These partners, which include conclude consultancy powerhouse PwC, will be using Rosslyn’s platform to deliver an enhanced consulting service, and the more data that gets processed, the more money Rosslyn earns, so ease of use is a key feature for the business plan.
Cenkos is predicting Rosslyn, which only floated on AIM in April of last year, will hit cash break-even in 2017 after management recently reassessed the level of overhead investment necessary to reach that level.
The broker reckons net cash could dip as low at £1.4mln in the first half of 2017, after which it should start to see the cash roll in as it moves into profitability.
If Cenkos is correct, that should put paid to any fears about the company coming cap in hand to the market.
“We see no requirement for further financing and the valuation discrepancy against the peer group is just too large to be rational,” Cenkos reckons.
Based on its estimates for 2015, the company’s enterprise value divided by projected sales (EV/sales) is just 1.5, a multiple that is a 60% discount to the UK software sector; in Cenkos’s view, the discount is unjustified given the firm’s growth potential, and the broker rates the shares a buy.
“We believe that this discrepancy will narrow sharply as Rosslyn provides confidence to the market that it can reach profitability without the need for additional financing,” the broker concluded.
Rosslyn shares currently trade at 12.5p.