|Written by GSCR Staff|
|Tuesday, 26 January 2016 06:57|
For those of you still shoveling out of the snow on the east coast, we will keep our head in the ‘clouds’. This is a tough market for small caps, as we mentioned in the Guide, but now is the time to keep your head up as there are definitely buying opportunities out there both for the long term and to ride the volatility in a short term trade.
Below is the two-year chart for Synchronoss Technologies, Inc. (NASDAQ – SNCR - $30.88) which illustrates one of our favorite technical signals, the head and shoulders pattern at a buying trough.
Above we commented that we would keep our ‘head in the clouds’. Synchronoss provides cloud solutions and software-based activation for connected devices worldwide. The Company’s services include intelligent connectivity management and content synchronization, backup, and sharing service procurement, as well as provisioning, activation, and support services that enable communications service providers, cable operators/multi-services operators, original equipment manufacturers with embedded connectivity, multi-channel retailers, and other customers to accelerate and monetize value-add services for connected devices. Its Activation Services, Synchronoss Personal Cloud, Synchronoss WorkSpace, and Integrated Life platforms provide automated on-demand, end-to-end order processing, transaction management, service provisioning, device activation, intelligent connectivity and content transfer, synchronization, and social media, as well as enterprise-wide sharing/collaboration through multiple channels, including e-commerce, m-commerce, telesales, enterprise, indirect, and retail outlets.
A critical factor going forward in valuation will be EPS growth. Synchronoss is forecast to grow EPS in 2016 over 2015 by 10% on 17% revenue growth over the same period. This puts the forward P/E at 12 versus the trailing of 28. The Company’s operating margin of 17% versus the industry average of -7% is not only a great sign, but will ensure that the EPS metrics are met with the revenue growth. Synchronoss has met or exceeded the metric five straight quarters. Finally, the Enterprise to EBITDA value is a low 8, a convincing figure indicating value for any M&A activity which would more than likely propel the SNCR higher as the acquired stock.
Earlier this month, Synchronoss announced a formation of Enterprise Business Unit which is comprised executives from the world’s largest enterprises in the financial services and information technology industries. The Board of Advisors will offer insight into the growing enterprise market demand for digital solutions and assist in the development of innovative business opportunities for Synchronoss. Additionally, the Company continues to introduce new product as evidenced by its introduction of Synchronoss Backup & Transfer™, an innovative, white label content transfer solution that uses Wi-Fi and cloud capabilities.
We think SNCR is a climber in 2016. The stock should get back to its cloud levels of $40 by the end of 2Q16.
Have a great day!
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