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24
Intrinsyc Technologies reports record year and looks to accelerate growth
Posted by: Gerry Wimmer
3/24/2019
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TOP IDEAS: Intrinsyc Technologies' (TSX: ITC) revenues and EBITDA for 2018 set new record highs. For 2019, M&A activity could be a stock price catalyst.






Investorfile’s share price accumulation target of $1.20 for Intrinsyc Technologies Corp. was reached on March 21, 2016. For the record, we do not revise share price targets for our Investorfile Top Ideas – Small Cap Value Stocks. We have positioned our blog to be one of the first providers of a pragmatic perspective of a small cap company stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.


In our last blog post about Intrinsyc Technologies Inc. (TSX: ITC – C$1.41) nine months ago, Investorfile went on the record, forecasting that the Company could experience strong growth in 2018 (See: Intrinsyc Technologies is on pace for record results, making it a buy today). Based on the Company’s 2018 annual financials, we were right!

Intrinsyc Technologies had impressive results year-over-year in 2018. The Company reported a significant jump in revenues, growing 24%, setting a new annual record at US$25.7 million. With the revenue growth came record annual EBITDA of US$1.9 million. The results were fueled by 33% revenue growth from the sales of the Company’s embedded computing modules. Intrinsyc’s computing modules are sold on a repeat basis to companies building a variety of Internet of Things (IoT) products that require advanced intelligence and connectivity. The Company reports all of its financial results in US currency.

For small cap investors who are unfamiliar with Intrinsyc Technologies Corp., the Company provides solutions that span a product's development life cycle from concept to production. Intrinsyc services high–tech device makers (original equipment manufacturers – OEMs) with the ability to offer differentiated products with faster time to market. As a Qualcomm licensee, Intrinsyc designs proprietary computer modules with Qualcomm processors. The Intrinsyc computer modules become the embedded systems that drive the dedicated functions for new high-tech products in markets including the Internet of Things, smart phones and tablets, drones and robotics, wearable security cameras, in-flight entertainment, auto console computers, plus many more.

It is important to know that Intrinsyc Technologies has a revenue model that derives sales from proprietary computer modules and development kits, as well as high-margin engineering services related to those modules and kits for an OEM product development program. As its OEM customers’ new products gain market acceptance, Intrinsyc shares in the commercial success by earning recurring revenues from computer modules sales and/or design royalties in correlation with the production ramp-up over the lifetime of new high-tech products.

Investorfile is of the view that the biggest potential catalyst for the stock price of Intrinsyc Technologies in 2019 may be the result of Merger and Acquisition (M&A) activity. We note in the most recently updated investor presentation posted on Intrinsyc’s website that its growth strategy more definitely includes M&A activity. The Company says it is seeking M&A opportunities that add complementary products, improve buying power and margins, provide cross-selling potential and add geographic expansion. With M&A activity, Intrinsyc anticipates that an increase in the Company’s size will attract new and institutional investors. Of note, last month Intrinsyc Technologies announced that it has engaged US-based Roth Capital Partners LLC as a financial adviser, with a mandate to accelerate strategic growth opportunities for the Company.

We are of the opinion that Intrinsyc Technologies (being debt-free with cash) has the financial capacity at the moment to acquire or merge with a target company that could add anywhere between US$15-25 million in annual revenues, potentially doubling the size of the Company. We also believe that certain acquisition/merger targets in the USA could offer a "back door” listing opportunity for Intrinsyc Technologies’ stock on the NASDAQ exchange, which could have significant impact on the market valuation and liquidity of the Company’s shares.

That said, Investorfile continues to have a positive view of the future prospects of Intrinsyc Technologies as one of our long-standing Top Ideas. We first recommended this stock when it was trading at C$0.75 (See: Intrinsyc Technologies: A high-tech turnaround play, for small cap value investors).

Echelon Wealth Partners provides research coverage on Intrinsyc Technologies and they just raised their 12-month target price on the stock to C$2.75.

Intrinsyc Technologies currently has about 20.1 million shares outstanding. Over the past 12 months the Company has bought back and cancelled over 1 million of its issued shares.

Company Website: www.intrinsyc.com

Author’s share ownership disclosure: ITC - Yes


Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile.com is not engaged in an investor relations agreement with Intrinsyc Technologies Corporation nor has it received any compensation from Intrinsyc Technologies Corporation for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Intrinsyc Technologies Corporation through open market transactions and for investment purposes only.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.