GMP slaps sell on Digital Dispatch
“Digital Dispatch Systems Inc.
DD $2.62 Target: $1.95
Lowering target price and recommendation to REDUCE
. For the past several quarters Digital Dispatch has performed poorly from a financial perspective. The company recently reported Q1 financials of $3.9 mm and ($0.05), significantly lower than our estimates.
. We are lowering our F07 revenue estimates from $27.5 mm and $0.20 to $25.6 mm and $0.13. We are introducing F08 estimates of $26.7 mm and $0.17.
. Our new target price of $1.95 is based on a 15x multiple to our lower F07 EPS estimates. In addition we believe that a REDUCE recommendation is warranted at this time as management refocuses its efforts on sales execution and improvement in financial results. Digital Dispatch is in risk of missing a major market move in the broader telematics sector where company’s such as Wireless Matrix (WRX:TSX) and WebTech Wireless (WEW:TSX) are benefiting from the strength in the market.”