Shares in Pelatro PLC (LON:PTRO) have the potential to double in the next two to three years as the customer engagement software house focuses on driving up its recurring revenue base.
So says Cenkos, the company’s broker, which initiated coverage of the company with a ‘buy’ rating.
In a comprehensive note, it pointed out that the stock currently trades at a 48% discount to its peer group.
This gap should narrow as the recurring sales base grows, it added.
Cenkos says Pelatro currently has visibility over at least US$4mln of revenues for the current year, or 54% of forecast turnover.
“A concerted move into managed services is improving the quality of revenues,” the broker explained in a note to clients.
“Management is targeting the growth in recurring revenues to cover the cash cost base of the company by 2022.
“This event will mark a material de-risking of the investment case and is the pathway to the share price doubling or more over the next two to three years.”
The shares marked time at 43.5p.
Pelatro processes data with the aim of turning users into loyal repeat customers.
Indeed, these loyal repeat customers might even be inclined to pay a little more for their latest mobile bundle if the telco gets the offer right.