InnerWorkings Represents A Pocket Of Value In An Otherwise Expensive Tech Sector

Wunderlich said in a note on Thursday InnerWorkings, Inc. INWK represents a pocket of value in an otherwise expensive tech sector. The comment comes close on heels of the firm's marketing trip with CEO Eric Belcher.

Analyst Ryan MacDonald noted that InnerWorkings remains focused on achieving 10 percent organic net revenue growth, helped by a combination of new customer adoption and expansion within the existing customer base. Expansion within the existing customer base would be achieved on the back of international expansion and capturing of more spends, the analyst said.

MacDonald highlighted sales initiatives such as investing in new sales heads, improving existing sales execution to short sales cycles and increase in the number of new customer contracts closed each other.

Margin Expansion Opportunity

Wunderlich also noted the company's drive to expand long-term net EBITDA margin to over 30 percent compared to 23 percent in 2016 through improvement in international margins. Other margin expansion initiatives include optimization of international margins through moving administrative personnel out of customer offices into a centralized office and focusing on technology-only sales and the upsell of higher-margin services.

The firm commended the company for its strong balance sheet and improving cash flow. While noting that the company operates in the execution services industry, which is highly fragmented and in the early stages of market penetration, the firm said InnerWorkings will benefit from instability at its primary competitor and capitalize on displacement opportunities like Jaguar/Land Rover.

As such, Wunderlich reiterated its Buy rating and $15 price target on the shares if InnerWorkings. Shares are trading at a discounted valuation.

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