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MMV BACKGROUND AND POSITIONING
As noted above, our adjusted target price represents a roughly 7x jump from current levels. In our view, the stock has been mistakenly oversold due to the protracted negotiations associated with its M&A activity---which is not unusual with small, privately held companies. The table below illustrates that the current price/revenue valuation for the peer group for 2019 is 7.3x. By applying the same metric to LDSR’s projected 2020E sales, we derive our 12-month target price.
With the current valuation metric in mind, a rule of thumb for next year’s valuation is that $2M in projected revenue for LDSR in 2020 is worth $14M in valuation today. Consider this:
In our view, investors should use the recent M&A news and the pending close of other acquisitions serve as catalysts for a jump in value and share price for a company that appears to be hitting on all cylinders and represents limited downside risk.
Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 25 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
I, Robert Goldman, hereby certify that the view expressed in this research report or article, accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.
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Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select format reflects the Firm’s internally generated stock ideas along with economic and stock market outlooks. Opportunity Research reports, updates and Microcap Hot Topics articles reflect sponsored (paid) research but can also include non-sponsored micro-cap research ideas that typically carry greater risks than those stocks covered in the Select Research category. It is important to note that while we may track performance separately, we utilize many of the same coverage criteria in determining coverage of all stocks in both research formats. Research reports on profiled stocks in the Opportunity Research format typically have a higher risk profile and may offer greater upside. In October 2018 and February 2019 Goldman Small Cap Research was compensated by the Company in the amount of $6000 for a research subscription service, including reports, alerts, updates and podcasts. Goldman Small Cap Research was compensated $1500 by a third party for this research update. All information contained in this report was provided by the Company via filings, press releases or its website, or through our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
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