Canaccord Initiates Coverage on Ituran (ITRN) with a Buy, Sees Significant Upside From Defensible Business Model and Brazilian Opportunity

December 2, 2008 12:37 PM EST

Canaccord Adams initiates coverage on Ituran Location & Control Ltd. (Nasdaq: ITRN) with a Buy. Price target $13.

Canaccord analyst says, "We believe that Ituran is likely to face near-term challenges due to F/X headwinds and a related decline in ARPU. However, we do not believe that the company’s core business is in a decline. Ituran has a defensible business model that includes a recurring revenue stream and long-term contracts with insurance companies, which gives us confidence in future revenue generation. We believe that Ituran is well-positioned to take advantage of the upcoming telematics mandate in the Brazilian market and has the ability to double its subscriber base in Brazil over time. Additionally, the company boasts a strong balance sheet and continues to produce solid cash flow."

Ituran Location and Control Ltd. (Ituran) is mainly engaged in the area of location-based services, consisting of stolen vehicle recovery and tracking services.

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