Canaccord Genuity Thinks DealNet Capital’s Stock is Going to Recover

By Jason Carr

DealNet Capital (TSXV: DLS), the Services sector company was revisited today, and remains undervalued for at least one analyst on the street. The company received a Buy rating from Canaccord Genuity’s analyst Kevin Wright, with a C$0.50 price target.

Wright commented:

“We are BUY rated on Dealnet stock with a C$0.50 target based on 2.0x our 2018E BVPS. Investment highlights Financial performance was just ahead of consensus. Dealnet reported revenue of C$10.1M, which beat the street at C$9.7M but was slightly behind our C$10.9M estimate. The variance from our estimates was primarily due to a lower-than-expected contribution from the Consumer Financing segment while Engagement Services was in line. Lower revenue resulted in a wider operating loss versus our forecast, though this was somewhat offset by lower operating costs. Finance receivables of C$170M were flat sequentially and below our estimate of C$204M Portfolio growth flat-lined this quarter. Management suspended some activity with dealers in Q1/17, which perhaps had a larger impact on growth than we expected as finance receivables were essentially flat. The company has re-engaged these dealers and “is already seeing the benefits of this process in the third quarter.” Our long-term investment thesis is predicated on double-digit growth of receivables to drive financial performance.”

According to TipRanks.com, Wright is ranked #1062 out of 4627 analysts.

DealNet Capital has an analyst consensus of Moderate Buy, with a price target consensus of C$0.58.

Based on DealNet Capital’s latest earnings report for the quarter ending March 31, the company posted quarterly revenue of C$9.52 million and GAAP net loss of C$2.85 million. In comparison, last year the company earned revenue of C$9.11 million and had a GAAP net loss of C$2.12 million.

DealNet Capital Corp. is an investment and merchant banking company. It operates through the following segments: Live Engagement BPO Services, Mobile Engagement Services and Consumer Financing.

The company’s shares closed on Wednesday at C$0.25, close to its 52-week high of C$0.61.