UPDATE: Maxim Group Starts Research Solutions Inc. (RSSS) at Buy, $6 PT
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Maxim Group analyst Allen Klee initiates coverage on Research Solutions Inc. (NASDAQ: RSSS) with a Buy rating and a price target of $6.00.
- We expect demand for RSSS' research document retrieval offering to come from providing cost and time savings.
- Growth in the annual subscription (SaaS) Platform segment (gross margins of ~80% are ~4x higher than the rest of the business) is a key focus.
- RSSS has a strong competitive position in an $11B TAM. Positives include sticky customers, cost controls, positive FCF and a debt free balance sheet.
- We project margin expansion due to mix shifts and high operating leverage after initial growth investments; we expect newly-appointed interim CEO and President Roy Olivier to take additional actions to spur further growth.
- Shares trade at an EV/revenue multiple of 1.6x based on our CY22E revenue. Our $6 PT is based on 4.5x our CY22E revenue, a slight discount to peers.
Shares of Research Solutions Inc. closed at $2.40 yesterday.
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