Market Overview

M&A A Core Investment Theme For i3 Verticals, Cowen Says In Bullish Initiation


i3 Verticals Inc (NASDAQ: IIIV) is an under-the-radar integrated payments provider, which has bullish long-term prospects, an analyst at Cowen said.

The Analyst

George Mihalos initiated coverage of i3 Verticals with an Outperform rating and $20 price target.

The Thesis

i3 Verticals can leverage its technology in a narrow set of verticals, which supports a high-single digit organic revenue growth, Mihalos said in a Monday note. This along with an aggressive M&A strategy can help the company achieve outsized double-digit revenue/EBITDA growth in the longer term, the analyst added.

Mihalos sees the company achieving differentiation through blending software with acquiring a few underpenetrated, fragmented verticals. More than 50 percent of volume is likely to be integrated by FY2019, he said.

The analyst expects M&A to be a core investment theme for the company. Acquisition of independent software vendors in its core verticals, where it doesn't currently own a software platform is a near-term focus, the analyst said.

"Given the consolidating nature of the acquiring industry and IIIV's focus on technology driven solutions, direct distribution and a narrow number of targeted verticals - we see the company as an attractive and likely take-out candidate long term," Cowen said.

Price Action

Since listing on June 21, shares of i3 Verticals have lost about 9.4 percent.

Related Links:

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Alternative Payment Methods Are Changing E-Commerce

Latest Ratings for IIIV

Jan 2019MaintainsOverweightOverweight
Dec 2018Initiates Coverage OnBuy
Nov 2018MaintainsOutperformOutperform

View More Analyst Ratings for IIIV
View the Latest Analyst Ratings

Posted-In: Cowen George MihalosAnalyst Color Initiation Analyst Ratings


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