Currently, the market is pricing in $25m EBITDA for FY19e (-$2m below the lowest end of guidance) trading on a historically low 1-yr FWD EV/EBITDA multiple of 8x.
As a reasonable base case, if they hit $29.5m for the FY (mid-point of mgmt. guidance) re-rates to 11x EBITDA (still significantly lower than the 14-22x range it’s traded over the L2Y) it gets you 62% upside
Obviously the 76% skew for EBITDA to the 2H to hit the midpoint of FY19e guidance is worrying. But that’s why it’s cheap. If they can hit / beat the $7m for the 1H, it will go a long way in generating faith in management.
