hft's all over this stock, page-15

Mobile Embrace in buy zone
Published 11 April 2014 08:41

Photo: Bloomberg
Mobile Embrace is in a sweet spot, in terms of industry dynamics.
Analysts at Bell Potter have declared Mobile Embrace’s recent share price pullback as a buying opportunity. The broker has attributed the sell-off in the stock to negative sentiment towards overseas tech stocks which has emerged in recent weeks.

However, it notes Mobile Embrace is profitable, and has contracts and earnings visibility that support the broker’s valuation and price target of 32 cents – a premium of nearly 50 per cent to the stock’s last closing price of 22 cents.

Mobile Embrace is a provider of integrated mobile and digital communications products and services to residential and business customers in Australia and internationally.

The company has two key products/services: M Payments and M Advertising.

M Payments effectively acquires customers through mobile advertising networks, as well as developing mobile products and services including payment platforms.

M Advertising provides tailored mobile advertising solutions designed to meet the communications and marketing needs of agencies, brands and publishers.

Consequently, the company is in a sweet spot in terms of industry dynamics. Bell Potter highlighted factors such as the release of mobile applications, as well as growth in No Limit Games as potential growth drivers.

The broker expects the company to deliver a net profit of $2.7 million in 2013-14, more than doubling to $5.6 million in 2014-15.

This would place the company on a 2014-15 price-earnings multiple of about 15, suggesting the company is good value on a price-earnings to growth (PEG) basis.

It is worth noting that hefty earnings per share growth of 49 per cent is also anticipated in 2015-16.