Market Overview

Lake Street Capital Initiates Pareteum, Turnaround Positive

Share:

Communications provider Pareteum Corp. (NYSE: TEUM) exhibits well-executed turnaround, underappreciated growth and tremendous share upside.

The Analyst

Lake Street Capital Markets analyst Eric Martinuzzi initiated coverage on Pareteum with a Buy rating and a $5 price target.

The Thesis

In Monday’s note, Martinuzzi outlined the company’s evolution over the past three years, including some highlights such as:

  • The addition of new Executive Chairman, Hal Turner and the multi-phased turnaround effort in 2015.
  • In 2016, the company sold ValidSoft, changed names from Elephant Talk to Pareteum, and revolutionized the business structure and focus to a new communications platform as a service. Later that year, the company returned to profitability and hired CEO Vic Bozzo.
  • 2017 featured a new customer base with 26 contracts covering 45 countries, as well as a strengthened management team and 5 percent growth.
  • In 2018, revenue grew over 60 percent as the company expects to close on the acquisition of Artilium, which will bolster the company’s competitive profile, Martinuzzi said. According to the note, this model assumes the deal closes on Sept. 30.

According to Martinuzzi, one of the potential investment risks surrounding Pareteum stock involves revenue concentration.

“As of Q2’18 two customers (Vodafone and Zain) made up 75% of total revenue. This is down from 97% in Q2’17. While this is a significant exposure, we do not believe either relationship is at risk. We expect the implementation of new accounts in backlog to reduce the risk over time.”

Price Action

Pareteum shares closed up 4.9 percent at $2.97 Monday.

Related Links

Sprint, T-Mobile Merger Looks More Likely As DOJ Calls For Just 3 Leading 5G Carriers

Move Over Verizon, T-Mobile Is The New Top Mobile Network

Latest Ratings for TEUM

DateFirmActionFromTo
Apr 2019Initiates Coverage OnOutperform
Sep 2018Initiates Coverage OnBuy
May 2018Initiates Coverage OnSpeculative Buy

View More Analyst Ratings for TEUM
View the Latest Analyst Ratings

Posted-In: Eric Martinuzzi Lake Street Capital Markets mobile network ValidSoftAnalyst Color Price Target Initiation Analyst Ratings

 

Related Articles (TEUM)

View Comments and Join the Discussion!

Most Americans Still Get News From Social Media, But Many Question Its Accuracy

Google Home Is Gaining Ground On Amazon Echo