Over the last few weeks, Canaccord hosted a number of marketing meetings for WeCommerce (TSXV: WE), while they write, “We remain confident in our positive view after an update with recently promoted CEO Alex Persson and new CFO David Charron.” They have lowered their 12-month price target from C$18 to C$16.50 and reiterated their buy rating on the stock.
WeCommerce only has 2 analysts covering the stock with an average 12-month price target of C$19.25, or a 53% upside to the current stock price. One analyst has a strong buy rating and the other has a buy rating.
Canaccord says that the WeCommerce shares look attractive as the pressure on software names has continued to persist, calling the company a “strong, cash flowing, captive customer and growth businesses at attractive valuation.”
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In the notes, Canaccord says that the management reiterated its goals to be a profitable company with positive free cash flow. While Canaccord says that the company EBITDA margin is in the low 30% range, with any free cash flow reinvested into the company.
To piggyback off this, management also reiterated that there has been no fundamental change in strategy. After a number of key management changes, Canaccord believes that the new CEO has a strong understanding of the Shopify ecosystem and “has played a pivotal role in shaping and executing the company’s current strategy.”
Canaccord notes that the company says they continue to have a large pipeline of potential M&A. Canaccord says that the company tracks over 1000 companies and continues to be active “despite recent management changes.” Though management does believe that multiples could continue to go lower as “the slowdown in ecommerce from supply chain constraints and return to brick-and-mortar stores.”
And lastly, Canaccord says that the company is more constrained by their balance sheet than anything else, with the company reporting $24.6 million in cash, which includes a $50 million term loan and $12.6 million of a revolving credit facility used, they estimate roughly $50 million of liquidity on WeCommerce’s books. They do note that the company has roughly $30 million in earnouts coming due soon but that the company can settle it in either cash or equity.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
