Canaccord reiterates 'buy' rating on Quixant following 'encouraging progress'
Analysts at Canaccord Genuity reiterated their 225.0p target price on technology outfit Quixant on Wednesday, citing some "encouraging progress" despite margin headwinds.
Canaccord said Quixant's interims, with a 31% jump in first-half group revenue to $36.5m, represented 52% of its full-year revenue expectation for a "typically H2 weighted" business.
The Canadian bank also stated it demonstrates a "buoyant recovery" in gaming and the strategic focus on human machine interaction for broadcast at Densitron.
"To this point, the strength of the gaming proposition helped secure five new business wins in H1 (including a self-serve betting terminal project with BetConstruct taking new wins over the last 15 months to 11) while a first lease agreement was launched in H2 with a long-term Gaming client," said Canaccord, which also added there were 61 broadcast customers in final stage approval within the Densitron pipeline.
As a result, Canaccord said order intake provided 115% order coverage against full-year management revenue expectations alongside improved visibility into 2022 to provide encouragement on the outlook.
However, Canaccord added that while management also anticipates adjusted pre-tax profits in line with its expectations, supply chain headwinds had temporarily compressed first-half gross margins to 30% despite strategic actions on inventory mitigating the impact, with the trend also likely to continue into 2022.
"As a result, while we upgrade our revenue expectations by 15% (FY21E) and 10% (FY22E) we are lowering our gross margin estimates which in turn drive our adj. PBT and therefore EPS estimates down by 13% and 15%, respectively," said Canaccord.