UPDATE: Lake Street Capital Markets Starts Omniq Corp. (OMQS) at Buy
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Lake Street Capital Markets analyst Jason Schmidt initiates coverage on Omniq Corp. (NASDAQ: OMQS) with a Buy rating and a price target of $13.00.
The analyst comments "We believe OMNIQ is transforming itself from a hardware-centric company to one positioned to drive sustained, meaningful top line growth, recurring revenue and margin expansion, and improving earnings leverage as it attacks multiple, greenfield opportunities in the object identification market. With a TAM the Company estimates will grow from $28B in 2019 to $62B in 2025, we believe the size of this market creates a rising tide lifting all boats. However, the appointment of Shai Lustgarten as CEO in 2017, a strategic shift toward the AI/machine-learning portfolio, an established and growing customer list, the recent acquisition of Dangot Computers, and the solutions’ broad applicability across numerous markets, gives us confidence OMNIQ can see outsized traction in this space. Ultimately, we believe the transition to a total solutions company will allow it to march toward the 3-year model targeting 50%-60% recurring revenue, 40%-55% gross margin, and a 15%-20% EBITDA margin. AI revenue is small today, but we look for this stream to continue to ramp throughout 2022 and 2023. As this happens, we believe shares, which trade at only 0.8x EV/`22 revenue, should start to see multiple expansion as investors better appreciate the significant addressable market, the broad applicability of the Company’s solutions, and potential earnings power in the model. We are initiating coverage with a Buy rating and $13 price target (1.0x EV/’`22 rev)."
Shares of Omniq Corp. closed at $9.75 yesterday.
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