Canaccord's Big Call: Pacific DataVision Is A Buy, Worth $79/Share

In a report published Wednesday, Canaccord Genuity analyst Gregory Miller initiated coverage of

with a Buy rating and a price target of $79. Pacific DataVision's unique strategy of rebuilding a standalone push-to-talk network dedicated for commercial enterprises with material fleet dispatch requirements is expected to be received well by the customers who are dissatisfied with the carrier-based offerings. The network is expected to be launched in June in four markets. "We note that FCC approval of the current petition to re-tune (rather than reband as the management has done previously) the 900MHz frequency in question is not necessary for the company to conduct its build and operations," analyst Gregory Miller mentioned. "We expect the FCC will approve the company's proposal to "re-tune" the 900MHz frequency in such a way that the company can create a contiguous 3x3MHz channel capable of broadband communications," Miller added. Although the company will need to incur expenses to re-tune radios that currently use spectrum, "…with the most recent AWS spectrum auction having cleared at a staggering $2.21 per MHz/ POP we are confident shareholder value exists in the spectrum valuation alone," the report stated. While the company's core business model can support a $45 valuation, additional shareholder value is likely to be created by the recreation of a PTI network. "Should the company achieve its goal of $200mm in revenues in five years with 50% EBITDA margins with growth thereafter, we believe a $40-45 DCF base valuation to be relatively conservative," the report added.