Raymond James Upgrades Mix Telematics, Says 2019 Estimates 'Look Sufficiently Conservative'

The vehicle software-as-a-service company MiX Telematics Limited - ADR MIXT has developed new fundamentals that improve the stock’s allure, according to Raymond James. 

The Analyst

Analyst Brian Peterson upgraded Mix Telematics from Outperform to Strong Buy with a $22 price target. 

The Thesis

The recent pullback gives investors a good opportunity to buy one of the strongest assets in the industry, despite recent concerns surrounding liquidity, currency risk and oil and gas exposure, Peterson said in the Monday upgrade note. (See the analyst's track record here.) 

“We’d note that all of these factors have improved over the last several quarters. Our opportunity to travel with management earlier this month also reinforced our belief that recent momentum with large fleet customers should continue in FY19, where we think our numbers look sufficiently conservative,” the analyst said. 

Macroeconomic headwinds such as significant declines in oil prices and weak South African growth began with the company's IPO and muted growth in recent years, Peterson said. 

“Positively, oil and gas fleets have rebounded nicely in CY17 and into CY18, with our energy team calling for further expansion in rig counts for the remainder of the year. We’d also note that GDP trends in South Africa have improved over the last few quarters, setting the table for more potential growth in the company’s largest geographic market." 

The potential for a U.S. listing creates a strong catalyst for Mix, as this move would close the valuation gap and facilitate further growth, according to Raymond James. 

Price Action

Mix Telematics shares were rallying 6.1 percent to $15.92 at the time of publication Monday. 

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