Leede Jones Gable has repeated its 'Buy' rating and $1.00 price target on Plurilock Security Inc following recent news the cybersecurity firm has acquired all the issued and outstanding shares of Integra Networks Corporation.
The broker's analysts noted that Integra is a cybersecurity and IT solutions leader, supporting implementation of technology solutions for the Canadian federal, provincial and local governments, as well as educational institutions, global healthcare organizations and world-class enterprise companies since 1985.
Integra focuses primarily on the federal government, serving more than 50 organizations over the last three years, with multiple top-tier customers including Shared Services Canada, Department of National Defence, and the Royal Canadian Mounted Police.
On a TTM (Trailing Twelve Month) basis, the analysts noted that Integra generated revenue of $5 milllion with 19% gross margins. The purchase price of $1.2 million is to be funded via a combination of Plurilock shares, cash on hand, and milestone-driven earn-outs, they said.
READ: Plurilock announces acquisition of Canadian enterprise IT and cybersecurity solutions provider Integra Networks
The analysts pointed out that Plurilock has said it plans to continue evaluating other accretive and profitable acquisition targets that will extend its distribution channels, while adding new top-tier customers and competitive technology assets to its business.
They noted that the company currently has an active M&A pipeline. Amongst others, its acquisition strategy includes the October 21,2021 announcement of the definitive asset purchase agreement of CloudCodes Software Private Limited, a leading cloud security provider based in India. Closing of the CloudCodes transaction is currently awaiting Indian regulatory approval, the analysts added.
The analysts also pointed out that Plurilock’s balance sheet remains strong. On November 10, 2021, the company closed a $4.6 million 'bought-deal' public offering of common shares, including the exercise in full of the over-allotment option. The proceeds from the offering are expected to be used for general working capital, research and development, marketing and general corporate purposes.
As a result of the offering, the analysts said they forecast that the company has a cash position of approximately $5.0 million at the end of 2021.
The analysts said they arrive at their $1,00 target price for Plurilock by applying a 1.2 times multiple to their full-year 2023 revenue estimate.
In early Toronto trading on Wednesday, Plurilock was trading at $0.34 a share.
Contact the author at jon.hopkins@proactiveinvestors.com