Analyst: Top-Line Inflection At Determine Isn't Coming Anytime Soon

Determine Inc DTRM reported second quarter earnings Thursday that fell in line with consensus. The company saw a 1.4-percent decline in sales from the prior quarter. 

The Analyst

Maxim Group's Brian Kinstlinger.

The Rating

Kinstlinger downgraded the stock from Buy to Hold and he removed its price target. Maxim's previous price target for Determine was $3. (See Kinstlinger's track record here.) 

The Thesis

The key takeaway from the earnings report is that the company is at least four quarters away from a material increase in revenue, said Kinstlinger. He projects revenue growth of 1.3 percent in fiscal 2018, as he lowered the revenue estimate from $28.1 to $27.8 million.

Maxim also lowered its fiscal 2019 revenue forecast for Determine from $30.9 million to $28.5 million, which implies growth of 2.5 percent in 2019.

Determine reported $1 million in annual run rate bookings, and the management expects $800,000 to $1 million over the next several quarters, which Kinstlinger said is insufficient to grow the business. The company added a chief marketing officer with significant experience in the procurement industry, but it will take some time to build the brand and the pipeline in order to materially increase bookings, said Kinstlinger.