Eckoh Share Discussion Threads

[septimus quaid] 05/5/2021 17:24

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on software and services firm Eckoh from 75.0p to 88.0p on Wednesday, stating the group was "well-positioned" for the 2022 trading year and beyond.
Canaccord said Eckoh had posted revenues in line with market expectations and adjusted underlying earnings "slightly" above the prior, meaning that second-half revenues had increased a low-single-digit percentage and adjusted EBIT was flat.

The Canadian bank views this as "an impressive performance" considering the second half of the prior year was "essentially pre-Covid-19".

Canaccord noted that Eckoh's statement also outlined 2022 full-year guidance for revenue and profit to be comparable with 2021 before "material year-on-year revenue and profit growth" in the 2023 trading year, leading the analysts to reinstate their forecasts for 2022 and 2023 and remain with their 'buy' recommendation.

"Our new target of 88.0p reflects a premium of 15-20% on an EV/sales valuation (annualised to December 2022) vs the UK IT sector (at 5.5x). We believe Eckoh shares should trade at this premium since the non-Covid-19 sales growth and profit margin are both above the sector average," said the analysts.

[wjccghcc] 05/5/2021 15:29

I don't disagree with that. It's just that you never know when the market will focus on their market leading position in a rapidly growing market and decide to value it according to where it will be in 2-3 years rather than where it is now.

[rivaldo] 05/5/2021 15:18

Cheers WJ, I understand all that and agree that ECK is a good quality company and has a lot of potential.

I just don't see much upside for 2021 at least - particularly given the stated stagnation for this year - as I consider the valuation to be too high for the business as it currently stands. Of course if there are some further large contract wins then sentiment will likely take the share price on, but without these imho the share price may drift for some time.

[wjccghcc] 05/5/2021 10:01

A bit harsh rivaldo. It's a combination of several factors which are masking the underlying progress.

1. Pandemic meant they've lost a year's progress due to delays in signing new business, particularly in H1. Recurring revenue nature and onboarding time of new contracts means they won't see the benefit of what they have signed for 6 months so the second half of this next financial year.

2. Withdrawal from US support business to transition to Secure Payments masks the growth in the latter. $ weakness also a headwind.

3. Transition from on premise secure payment installations (with upfront revenues) to more cloud based installations (less upfront revenues but more recurring revenues).

4. UK revenues linked to transactional volumes (congestion charge etc.) which were hit last year and will take a while to recover this year.

They are the market leader in contact centre secure payment protection with only two competitors. PCI-PAL is valued at 17x revenues and will be loss making for the next 2 years. Eckoh's US revenues are likely to more than double over the next 3-4 years to $30mm ARR. Value that at 8x and the UK business is thrown in for free, as is any rest of world expansion through the channel partner network they're now investing in.

And that's ignoring any takeover interest from the US.

[rivaldo] 05/5/2021 09:34

ECK made 1.08p EPS to March 2018. They're now forecast to make 1.4p EPS to March 2022. That's a pretty poor 30% growth in four years for what's supposed to be a high growth company on a huge premium rating.

Even allowing for 1.8p EPS in the year to March 2023 - almost two years away - the P/E at 77.5p will still be 43.

The cash is 6% of the m/cap, and they have decent recurring income and good prospects in the USA, but that hasn't stopped them stagnating for some time now even given the pandemic.

The share price just seems far too high imo. But then that's always been the way with ECK, so WTFDIK?!!

I like the company and its prospects, but simply cannot see material upside from these levels, at least not for some time yet. Cue huge contract wins :o))

[zipstuck] 05/5/2021 08:54

With no growth in FY 21 and FY22 and relying on no 3dr wave of Covid for 23 reduced to long term hold in pricey market

[septimus quaid] 26/4/2021 10:50

there seems to be consistent trades at the 80p mark this morning

[mazarin] 19/4/2021 23:57

I started this thread in 2013 when I bought back in at around 24p, although I have been in and out since 2004. So I have developed a something of 'a feel' about its progress over many years of holding. Starting this year at 64p, ECK has so far has had a promising run, closing today at 79p, powered by recent announcements of Cloud based payment security systems that have resulted in securing sizeable Contract wins in the US. ECK's always been driven by News of Contract wins and usually retraces when BoD go quiet. This time is different as ECK has largely hung on to its gains. This suggests to me something is happening behind the scenes.

[tnt99] 14/4/2021 09:51

This stock is going places possibly to the moon lol

[matt123d] 06/4/2021 22:39

Increased my position here today. Quarterly triangle at 90p

[septimus quaid] 06/4/2021 16:47

Interesting spike up at the end of the day, something brewing?

[septimus quaid] 01/4/2021 17:24

Exaggerated fall today as a tiny Uncrossed Trade (17 shares) went through @ 73p just after the closing bell yesterday

[wjccghcc] 30/3/2021 09:08

zipstuck, £7.9mm was across the UK and US businesses. At end Sep, new US secpay cntrcts were $5.9mm, so H2 was $5.7mm vs $3.4mm for H220 so there may be an element of seasonality. I think the point they wanted to make was that despite the on premise contracts being limited by COVID, the Cloud ones have taken up the slack.

US Secpay new contract wins for the last 4 halves have been $5.7/5.9/3.4/7.3mm.

[red army] 30/3/2021 08:34

zipstuck - please explain as don't understand

[zipstuck] 30/3/2021 08:15

Investors should look carefully at this announcement and compare to the contracts won at the end of September which was 7.9

[hybrasil] 18/3/2021 10:39

Will Eckoh buy Netcall?

[rabbrooks] 17/3/2021 17:49

Look at the profit in relation to the valuation in the market place. Difficult to see an improvement in share price without a major effort in North America. Maybe a new franchiseee would be the answer.

[hybrasil] 17/3/2021 16:52

your horse is about to leave the parade ring

[nickelmer] 10/3/2021 07:23

It is frustrating, to say the least, to watch the share price of their UK listed smaller competitor rocketing upwards whilst eckoh slowly go south, no news will always leave a share price to drift downwards as investors have no information, eckoh need to deliver on the news/contract wins front, and reasonably soon, if they want to deliver any sort of decent share price performance.

[septimus quaid] 04/3/2021 16:59

Been a while, "feels" like we are due some kind of update soon

[nhb001] 18/2/2021 15:15

I think this is just a plaything for fund managers and/or large investors at the moment as they swap huge tranches of shares. The ticks up and down maybe largely irrelevant.

[red army] 17/2/2021 12:11

There is a nice bullish pennant forming and a move to 68 would be great and hopefully confirm a move towards 90p ish. That is why I bought in to this stock. Also like the story here and the low amount of posts keeping under the radar. Not long to wait now.

[mazarin] 17/2/2021 09:57

When I created this thread (19/08/2013) nearly 8 yrs ago it was then trading around 24p. The Company has changed significantly during this time and I’ve been in and out several times since it was 4p many years earlier. I now note ADVFN have decided to remove my header Charts and News tags that I purposely included in the Introduction and as such have undermined its original purpose, such is the pity. This is the case with all my Posts and I’m assuming these changes have been done to squeeze out free bb contributors from the platform. However, I note comments frequency has notably declined. Today trading slightly up at 65p ECK’s rise can hardly be regarded as meteororic over 8 years by any standard, however I still hold in hope of better things to come.

[techno20] 29/12/2020 20:29

Chunky buy after hours. 75,000 @ 65p. Decent chance this will be tipped over coming days.

[techno20] 29/12/2020 16:21

Took an initial position today, hoping the share price and BB will liven up in 2021. Excited about the prospects in the US combined with director purchases before Christmas. Not cheap at the moment, but will be if the 80% growth in secure payments continues apace. GLA