UPDATE: Northland Capital Markets Starts SciQuest (SQI) at Outperform
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Northland Capital Markets initiated coverage on SciQuest (NASDAQ: SQI) with an Outperform rating and a price target of $20.00.
Analyst Jeff Houston commented, "We like that clients typically realize a 5-10x return on investment in the first year by realizing up to an 80%-plus increase in contract compliance, reducing order-cycle times by up to 66%, and generating up to 20% savings on every dollar under management. We expect SciQuest to continue its dominance in higher education where it is the go-to solution and maintain a strong presence in the state-and-local verticals while successfully expanding in broader commercial (including CPG and healthcare/life-sciences). It will also execute, in our opinion, on a meaningful cross-sell opportunity—about 55% of clients us just one of its 10 solutions and 45% use more than one with an average of four. We also like its strong customers, expanded product portfolio,and takeout potential. If operations continue to improve, we view potential buyers to be IBM, Oracle, salesforce, NetSuite, and Workday. If operational issues resurface, then the most likely buyer will be private equity. We view the biggest risks to be execution, elongated sales cycles with suite deals, customer retention, and competition from Coupa, and Ariba (SAP). At the current valuation, we think there is more upside potential than downside risk. Our $20 price target is based on a 2016 EV/Revenue multiple of 3.1x."
Shares of SciQuest closed at $13.66 yesterday.
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