Kaufman Bros. Initiates Coverage on Evolving Systems (EVOL) with a Buy

October 5, 2009 5:01 PM EDT

Kaufman Bros. initiates coverage on Evolving Systems, Inc. (NASDAQ: EVOL) with a Buy. Price Target $11.50.

Kaufman analyst says, "We believe Evolving Systems' uniquely positioned over-the-air SIM Card activation solution known as Dynamic SIM Allocation (DSA) should lead to accelerated revenue growth over the next few years. In 1H09, Evolving won four deals for its DSA solution compared to just one in 2008 and one in 2007, and we expect other deals to be announced by year-end as the company continues to gain traction in emerging markets e.g., Africa, Asia and South America (up 29% Y/Y in 2Q09)...In 2Q09, operating margin was a record 18.6% versus 15.7% in 1Q09 and 11.4% in 2Q08. As the company's product mix continues to shift to its higher margin DSA solution we expect gross margin to improve while at the same time its ability to leverage its large employee base in India should continue to improve its operating margin. That said, the company has also benefited from FX in recent quarters since an increasing dollar reduces employee costs."

To see more analyst ratings on EVOL Click Here.

Evolving Systems, Inc. provides software solutions and services to the wireless, wireline, and Internet protocol (IP) carrier markets.

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