HMS Networks (Buy, TP: SEK210.00) - Big data, big potential
HMS Networks’ market-leading position in a niche that is poised to benefit from secular growth for industrial communication gives it a sustainable competitive advantage, in our view. We have identified solid organic growth prospects from a robust design-win base and untapped potential in cloud-based IoT software. Moreover, our 30%+ 2018–2021e FCF CAGR suggests scope for continued M&A. We initiate coverage with a BUY and SEK210 target price, while our value gap analysis suggests even greater long-term potential.HMS Networks AB (HMS) is a Sweden-based company engaged in the provision of communication technology for industrial automation. The Company provides solutions to connect industrial devices to networks and products enabling interconnection between different industrial networks. The Company's products are classified into two brands, namely Anybus and Netbiter. HMS, under the brand name Anybus, manufactures and markets intelligent communication technology for machines and electrically controlled equipment. Under the brand name Netbiter it develops and sells communication equipment that facilitates remote management through the Internet, either via the fixed telephony network or the mobile telephony network. The Company operates through numerous subsidiaries, including HMS Industrial Networks AB, IXXAT GmbH, a supplier of communication technology for industrial automation, machine manufacturing and the automotive industry, as well as eWON SA.
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