Canaccord Believes MiX Telematics Could Benefit From Long-Term Growth Drivers

The lead analysts reiterated his Buy rating while reducing the target price from $10 to $9 citing reduction in estimations for the next year. The company's EPS provided positive surprise in the last two quarters.

Related Link: MiX Telematics Management Cut Q2 Sales Outlook; William Blair Critiques

"With MiX representing one of a handful of fleet management SaaS providers, along with a strong global presence and over 578,000 global subscribers, we believe the company represents a solid candidate for any potential consolidation in the fragmented global fleet management vertical, at a time of generally heightened M&A activity in the IoT fleet management market," the brokerage told clients in a research note.

Canaccord sees the management pressured to manage costs in a challenging macro environment with the top line facing challenges. The brokerage highlighted the company's revenue outlook reduction of "3–5 percent or below its initial guidance," citing weaker than projected deployment of fresh deals reached in the recent past.

The brokerage reduced its 2017 adjusted EBITDA projections from $19.8 million to $18.2 million for the fiscal year 2017 to reflect slower subscriber growth in the near term. For the fiscal year 2018, the analyst slashed its EBITDA projections from $23.0 million to $21.5 million.

Following this, the stock shed $0.13, or 2.45 percent, to $5.18.

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