Shares of EQ Inc. (TSXV:EQ) have generated average annual returns of nearly 500% during the past five years
Capital Ideas Media | November 26, 2020 | SmallCapPower: The digital age has meant people are using multiple devices (desktops, laptops, tablets, and smartphones) to communicate, consume content, and obtain desired products and services. This has presented challenges for companies trying to understand, predict, and influence consumer behaviour.
(Originally published on Capital Ideas Media on September 29, 2020)
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Enter EQ Inc. (TSXV:EQ), which has developed a SaaS platform using data sets, advanced analytics, machine learning and artificial intelligence to mine insights from movement and geospatial data. This intelligence is allowing businesses to attract and retain customers, as well as grow their client base.
EQ stock, meanwhile, has been flying under the radar, generating average annual returns of nearly 500% during the past five years.
Canaccord Genuity analyst Aravinda Galappatthge recently initiated coverage of EQ Inc. stock with a “Speculative Buy” rating and a target price of $2 per share, believing the Company has the potential to grow “exponentially” over the next several years.
“The core offering of EQ is centered on the objective of efficient media, where it serves advertising clients by discovering and formulating highly-targeted audiences for their products and services and then buying media that is targeted accordingly,” he said.
“A unique element of EQ is the use of its extensive location behaviour data, which is extracted by essentially tracking the movement of millions of mobile devices anonymously. This data is, in turn, overlaid with a multitude of demographic information and mobile app activity to form a highly valuable and complete picture for marketers.”
Mr. Galappatthige added that EQ remains in the early stages in its move to monetize its platform, currently seeing run-rate revenues of $10-11-million annually with data solutions contributing 20% to 25% with the remainder coming from ad services. However, he’s projected triple-digit growth in its data-solutions segment, leading to total revenues exceeding $20 million and break-even EBITDA by fiscal 2022.
EQ Inc. also boasts a strong balance sheet with $5 million in cash, which Mr. Galappatthige believes can carry the Company into Fiscal 2022.
“While there have been a number of early-stage entities in this space in North America and Europe, we believe that EQ’s traction with a high-quality client base (including Walmart and Bell), status as a public company (others are private), and the quality of its LOCUS platform, which serves as a holistic B2B solution for markets and customer analysis, sets it up to first make its mark as a leader in this space in Canada and then grow internationally,” the Canaccord Genuity analyst said.
He added that EQ has plans to grow in the U.S. over the medium term (south-of-the-border sales currently make up just 16% of total revenue), which could involve making an acquisition.
EQ’s stock price has benefitted from the Company’s tight capital structure (just 59 million shares outstanding). This provides EQ the flexibility to do an equity financing should a suitable takeover target present itself.
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