Shares of technology company Quarterhill Inc. (QTRH-T) have been on the rise amid strong third-quarter earnings expectations and anticipated growth through new contracts and acquisitions.
The Kitchener, Ont. based company’s stock was up 5 per cent in early trading Wednesday and has been up about 30 per cent over the past five days and 60 per cent in the past year. Analysts say the rise in technology stocks in general, amid the acceleration to digital services amid the pandemic, is also adding momentum to the stock.
Shares of Quarterhill — formerly known as WiLan Inc., now a division of the company — were up 13 cents to $2.67 midday Thursday. The stock hit a 52-week high of $2.75 on Tuesday.
“The stock is marching up on a combination of things,” said Cormark Securities analyst Gavin Fairweather in an interview, including earnings momentum, new contracts, anticipated mergers and acquisitions to drive growth and positive patent decisions. He has a “buy” and $3 target on the stock.
“We should also expect to see more momentum on the M&A side,” he said, spearheaded by the company’s relatively new chief executive officer, Paul Hill, who took the job on June 1. Quarterhill also recently named a new chief financial officer, John Rim, as of Oct. 1.
Earlier this month, the company reported preliminary third-quarter revenue in the range of $80-million to $87-million, which significantly beat analyst consensus expectations prior to the release of $27.2-million. The company said its final third-quarter results will be released on Nov. 5
In an Oct. 8 note, Mr. Fairweather of Cormark said Quarterhill’s third quarter will be its strongest quarter since the third quarter of 2017, citing a string of new deals with multiple contracts and agreements signed since the second quarter.
In an email to the Globe, M Partners analyst Paul Piotrowski said he expects the upcoming quarter’s results “will show a significant improvement to QTRH’s already strong cash balance, providing a higher floor for its share price,” citing the company’s stock ticker.
Mr. Piotrowski, who has a “buy” rating and $3 target on the stock, said the new CEO and CFO should provide “stability and direction,” citing Mr. Hill has extensive experience both in managing technology-based companies, and in evaluating and integrating acquisitions.
He also said new management has been providing clarity on its M&A strategy, which is centered on its International Road Dyanmics (IRD) and Intelligent Transportation System (ITS) industries.
“The ITS market is currently benefitting from government initiatives to protect roadways and manage traffic while also reducing deficits,” he said. “QTRH is also leveraging IRD’s credibility within the ITS market and the expertise of newly appointed IRD CEO Rish Malhotra to drive accretive acquisitions.”
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