UPDATE: B.Riley Starts Skillsoft Corp. (SKIL) at Buy

B.Riley analyst Raj Sharma initiates coverage on Skillsoft Corp. (NYSE: SKIL) with a Buy rating and a price target of $14.00.

The analyst comments "The new Skillsoft combines the legacy Skillsoft entity and Global Knowledge to create the world’s largest corporate learning platform with CY20A revenue of $691M and adjusted EBITDA of $162M. Skillsoft is in the final stages of its turnaround, and we believe the new company presents an opportunity to invest in a combination of two leading digital learning companies with a debt-reduced capital structure and a new longer-term and strategic investor base—at a discounted valuation versus competitors. We view this steep discount to competitors in a world of highly valued SPAC business combinations as a unique opportunity—one that we believe investors should consider. Skillsoft’s new management team is working to grow a compelling corporate learning platform by using a focused marketing strategy and cross-selling new content/products to drive retention. Skillsoft aims to drive top-line growth by increasing penetration and adoption of its digital platform, Percipio, and to affect healthy bottom-line growth by capitalizing on the high operating leverage inherent in its business model. Long riddled with heavy debt, Skillsoft now has a renewed ability to shift from its legacy operations to a 100% digital recurring platform. We expect Global Knowledge, which was negatively affected by COVID-related shutdowns, to return its classroom-based instruction and for the company to, in turn, present a clearer story free from the noise of fresh-start accounting and recapitalization costs. As digital adoption progresses and all of Skillsoft’s customers shift from dual deployment to digital only, we believe the company could become a leading corporate learning player with $1B+ in revenue, significant growth from its current size of $675M, within a few years. Management expects the business to grow by the mid single digits on the top line and by the high teens on the bottom line over the next few years. SKIL trades at 2.3x CY22E EV/revenue and at 7.7x EV/adjusted EBITDA, while its closest competitors trade at multiples north of ~5x and 14x, respectively."

For an analyst ratings summary and ratings history on Skillsoft Corp. click here. For more ratings news on Skillsoft Corp. click here.

Shares of Skillsoft Corp. closed at $9.76 yesterday.

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