Pureprofile beats prospectus forecasts: still trading well short of broker price targets

By Trevor Hoey. Published at Aug 19, 2016, in Features

Shares in Pureprofile (PPL) surged 20% from 45 cents to 54 cents on Thursday after the company outperformed prospectus forecasts for fiscal 2016. It was a strong result at all levels with revenue ($28.5 million), margins (53%) and net profit ($1.3 million) beating management’s guidance.

However, the share price performances of PPL should not be used as a guide to future performance or be used as a basis for an investment decision.

While the company only listed on the ASX in July 2015, it can be seen in the table below that this result represents a continuation of the group’s strong performance prior to listing.

With better access to capital PPL is now well-positioned to accelerate its growth strategy and Blue Ocean Equities’ analyst, Gregg Taylor is forecasting profit to increase by 126.4% in fiscal 2017 to $2.9 million representing earnings per share of 4.4 cents.

The broker expects earnings per share to nearly double again in fiscal 2018 to 8.1 cents, implying a PE multiple of 6.6 relative to yesterday’s closing price.

As management outlined yesterday, there are a number of initiatives in the pipeline that have the potential to facilitate this growth. The group is in discussions with its existing partner News Corp with a view to extending its News Connect platform to the US and UK.

PPL expanded its position in the big data industry in February with the acquisition of Effective Measure’s platform in Australia and New Zealand.

The company is now benefiting from strong publisher relationships that came with the acquisition, including Australia Post and Bauer whose specialist audience targeting and measurement capabilities have broadened the group’s range of products.

In terms of target markets, Chief Executive, Paul Chan highlighted that data analytics and programmatic media continued to be aggressively adopted by advertisers, boding well for PPL in fiscal 2017 and beyond.

Chan is looking for top line growth from overseas expansion while also striving to improve margins across the business.

Some of this growth should be evident in the first quarter of fiscal 2017 with the company having secured a number of new managed campaigns in May and June.

Taylor noted that PPL finished fiscal 2016 with two consecutive quarters of positive cash flow and said that cash flow had been strong since June 30, a trend that is expected to accelerate in fiscal 2017.

Taylor has a buy recommendation on the stock with a price target of $1.30, implying substantial upside of 140% to yesterday’s closing price, although it should be noted that analysts’ recommendations and price targets are only estimates and any investment decision should not be based solely on this information.

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