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Here’s why analysts rate Bigtincan shares a buy

Nikhil Gangaram
dice labelled buy and sell rolling on a sharemarket chart

Large tech stocks on the ASX came under pressure in late 2019 as analysts debated earnings multiples and fair value estimates. Despite the cloud of analyst uncertainty over the sector, there are still good value tech stocks to be found on the ASX.

The Bigtincan Holdings Ltd (ASX: BTH) share price has started 2020 on the right foot, with the company’s shares trading near all-time highs. Here’s why analysts think the Bigtincan share price can go even higher.

What does Bigtincan do?

Bigtincan was founded in Sydney in 2011 and has become a global leader in providing sales enablement software. The company’s flagship Bigtincan Hub is a platform that uses machine learning and artificial intelligence to improve sales execution, training and customer service.

Bigtincan has more than 200,000 users in over 52 countries, with the company’s platform available in 17 languages. The company also boasts an impressive client portfolio with notable contract wins with brands and companies such as Nike, Sephora and Sony Playstation.

How has Bigtincan performed?

In FY19, Bigtincan showed strong progress towards profitability. Highlights of the company’s FY19 results included a 51% increase in revenue of $19.9 million for the year and 33% increase in organic growth. Despite reporting earnings before interest, tax, depreciation and amortisation at a loss of $3.6 million, it was a 49% improvement from a loss of $7 million the year prior. Bigtincan also completed the acquisitions of Zunos and FatStax last year, adding to the company’s services.

For the first quarter of FY20, Bigtincan reported annualised recurring revenue of $27.8 million, a 19% increase from the prior corresponding period. In addition, the company affirmed guidance of 30–40% organic growth for the full year. For the first quarter, Bigitincan also reported cash receipts of $5.3 million, a 56% improvement. Net cash at the end of the first quarter was $17.6 million, which should allow Bigtincan to accelerate expansions in the UK and US markets

Why analysts rate Bigtincan as a buy

Equity analysts from research firm Philip Capital recently initiated coverage on Bigtincan. Analysts cited that the company is enjoying powerful tailwinds and structural changes driven by cloud technology and the move to software-as-a-service (SaaS) providers.

Analysts also lauded the 33% organic growth experienced by Bigtincan last year and acquisitions that have enlarged the company’s services and customer base in key areas. According the analysts, Bigtincan is well positioned to take advantage of industry trends and have a buy recommendation on the company with a price target of $0.78.

Should you buy?

In my opinion, analyst research should not be the sole reason in prompting an investment decision. In saying that, I also think that Bigtincan has excellent growth potential given the move to cloud technology and emergence of a lucrative SaaS market.

If the company can continue to build on its acquisitions and services there is great potential that Bigtincan will grow its market presence. The company’s share price is currently trading near all-time highs, which could serve as an indicator of further upside.

The post Here’s why analysts rate Bigtincan shares a buy appeared first on Motley Fool Australia.

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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of BIGTINCAN FPO. The Motley Fool Australia has recommended BIGTINCAN FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020