Canaccord Genuity (TSX:CF, LSE:CF) has repeated its 'Speculative Buy' rating on Think Research Corporation stock following the firm's recent Q4 results, whilst cutting its target price to $2.00 from $3.00.
In late morning trade on Tuesday, Think Research was trading at C$0.79, down 1.25% on Monday's closing price.
In a note to clients, the brokerage's analysts noted that Think Research reported December Q4 results that featured a narrower than expected EBITDA loss as the company faced few coronavirus (COVID-19) impacts and reaped early benefits from its post-M&A cost savings program.
READ: Think Research says key acquisitions helped drive record Q4, full-year revenue in 2021
Looking ahead, they added, Think Research management reiterated its guidance to exit 2022 with run-rate revenue of $90 million to $100 million and positive adjusted EBITDA of $7million to $10 million but with elevated re-investment in sales and marketing to support the organic growth profile and as COVID-19-related uncertainties linger at its clinical and CRO businesses.
The analysts said: "We maintain our SPECULATIVE BUY rating but with a lower target price of $2.00 (from $3.00) as we factor in near-term COVID impacts, temper our EBITDA expectations, and reflect ongoing multiple contraction for healthcare IT assets."
They concluded: "Given THNK shares remain at 0.8x EV/Sales and 25.6x EV/EBITDA on our revised 2022E, we continue to view execution against this guidance with firming profitability as a potential catalyst relative to higher-priced peers."
Contact the author at jon.hopkins@proactiveinvestors.com