Mach7 Technologies Limited

M7T Details

Q1FY22 Financial Performance: Mach7 Technologies Limited (ASX: M7T) is engaged in developing solutions that provide a complete view of the patient to inform on diagnosis, reduce care delivery delays and costs, and improve patient outcomes.

• Update on Contracts and Sales Order: Total contract value (TCV) stood at $16.2 million, substantially up by 368% from the prior quarter. Significant contract wins were secured from Advocate Aurora Healthcare and Trinity Health. Contracted annual recurring revenue (CARR) clocked at $16.8 million, up by 6% from the prior period.
• License Details: Trinity Health entered a 7-year contract with M7T at a combined contract value of $16.45 million. Advocate Aurora Health issued a license to M7T’s eUnity universe viewing solution with a contract value of $4.3 million. St. Luke’s Boise purchased M7T’s eUnity universe viewing solution license at $443,000 for the first year.
• Cash Position: The comparative low customer cash receipts, due to seasonally low cash receipts due to increased annual renewals (falling in H2FY22), delivered a cash position of $17.2 million, down from $18.4 million reported for the end of Q4FY21. Almost 15% of the renewals in the previous year culminated in Q1FY22.

FY21 Operating Metrics, Analysis by Kalkine Group

Outlook

M7T expects strong revenue results and maintains its near-term target of increasing $27 million in revenue for CY21. Once the target mentioned above is met, M7T will have delivered $15 million in H1FY22. FY22 revenue results are expected to be $19 million over the FY21 reported revenue. M7T is seeking positive EBITDA for FY22.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock’s historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation

The stock of M7T gave a negative return of ~31.405% in the past year. The stock is currently trading lower than the 52-weeks’ average price level band of $0.810 - $1.590. The stock has been valued using the EV/Sales multiple-based illustrative relative valuation method and arrived at a target price low double-digit (in percentage terms). Considering business uncertainties and litigation cases, the company might trade at a slight discount to its peers’ average. For valuation, few peers like CogState Ltd (ASX: CGS), ImExHS Ltd (ASX: IME), Alcidion Group Ltd (ASX: ALC) have been considered. Considering the current trading levels, increased contract wins, favourable sale orders, key associated risks with the business, and upside indicated by valuation, we give a “Speculative Buy” recommendation on the stock at the market price of $0.825, as of 21 December 2021, 12:00 PM (GMT+10), Sydney, Eastern Australia.

M7T Daily Technical Chart, Data Source: REFINITIV

Note: The purple line reflects the RSI (14-day period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: - 

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest. 

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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