Boosted growth and earnings ahead
Boosted growth and earnings aheadINITIATION COV.
We are initiating coverage of EasyVista with a Buy recommendation. The group offers a successful ITSM (IT service management) software solution. Reinforced staff and management should allow EasyVista to capture a significant part of the market’s growth, as shown in recent figures (H1 sales +50%). The breakeven point was reached in 2017. Cash generation should be strong by 2020, when the EBITDA margin should be close to 20%.
A success story in IT service management
EasyVista is a software editor, providing a global solution to corporations to make delivery and support easy to implement. The product is user-friendly and has codeless workflow settings. Marketing skill is a key edge for the group’s success. A major part of growth will stem from the US market (50% of world market), where EasyVista has considerably reinforced its staff and management team.
Cash and profit generation ahead, after a strong investment phase; H1 18 sales up 50%
The turnaround point was reached in H2 17. The group’s FY 17 €-0.7m EBIT was actually split €-2m in H1 and €+1.3m in H2, i.e. a +7.7% operating margin, which should more or less double in 2018, thanks to significant sales growth. The group’s H1 sales (€18.5m) were up 50%, of which +63% in H2. 85 new clients adopted EasyVista solution in H1, in both Europe and the USA. The renewable licence’s new contracting mode recorded €5m in sales (vs. zero in H1 17), whereas traditional perpetual licence sales were also – and paradoxically – up 48%, because French public entities prefer this contracting system (the consequence of budget credits-driven decision-making).
Current valuation doesn’t fully integrate earnings momentum ahead
Assuming a 2020 EBITDA close to €10m (c.20% of sales), our DCF model results in a €57.7 valuation per share for EasyVista. According to our average of the different valuation methods, our six-month target price stands at €50.75.
Easyvista SA. Easyvista SA is a France-based company that specializes in information technology (IT) management. The Company provides integrated and modular solutions to cover a range of IT management requirements, including programs for inventories, audits, and asset management for IT and telecommunication equipment, among others. In addition, it offers maintenance, training and consulting services relating to its software programs. The Company's products are primarily marketed under the EasyVista brand name, offering EasyVista Classic (the traditional license option) and EasyVista.com (Software as a Service mode). The Company is operational in six countries, including France, the United States, the United Kingdom, Spain, Portugal and Italy, and has also a network of over 60 certified partners in 16 countries in Europe, Africa, the United States, Canada and Asia. It operates through Rift Technologies and Knowesia SAS.
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