- Absolute Software Corp ABST clocked Q4 adjusted revenue growth of 70% to $54 million, beating the consensus of $53 million.
- EPS loss of $(0.10) beat the consensus loss of $(0.11).
- Raymond James analyst Adam Tindle maintained Absolute Software with an Outperform and raised the price target from $14 to $16.
- The re-rating followed Q4 results that close out a second consecutive year of "Rule of 40" performance (key SW metric: sum of growth + profitability) and initial FY23 guidance that suggests this will likely continue.
- The re-rating followed the NetMotion acquisition that closed just over a year ago, and the since rebranded Endpoint and Access product portfolio has taken shape.
- He envisions further synergy over time via extending the core persistence value prop across a broader platform and interesting initiatives around data/telemetry that are consistent with secular trends in next-gen security postures.
- He sees a disconnect between healthy double-digit ARR growth & EBITDA margin and the valuation of ABST relative to other assets that exhibit these characteristics. However, he suspects a solution over time via outperformance in the stock.
- BMO analyst Thanos Moschopoulos reiterated Market Perform with a price target of $11.50.
- He raised his estimates following upbeat results.
- Moschopoulos remains on the sidelines as he would like better comfort on ABST's longer-term competitive prospects in ZTNA.
- However, he saw more upside than downside to the stock given its valuation, ABST's execution under its current leadership, and a potentially accelerating growth trajectory.
- Price Action: ABST shares traded higher by 18.98% at $12.16 on the last check Wednesday.
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