Financial services firm Celfin Capital has modified its forecast for Chilean IT systems integrator Sonda, maintaining its buy recommendation and increasing its 12-month, DCF-based target price to 1,533 pesos per share.
The new target price indicates potential stock price upside of 17.9%, and a total return of 20.4%, which includes the company's estimate of a 2.5% yield, Celfin said in a research report.
The firm expects earnings per share to grow 25.3% this year, an additional 27.2% in 2012 and 27.2% in 2013. Ebitda is expected to grow 26.5% in 2011, 24.9% in 2012 and 20.7% in 2013.
This growth is due to stable revenue and cash flow and a very solid, un-leveraged balance sheet, which allow Sonda to easily raise capital to fund its expansion, Celfin said.
According to the report, Brazil will grow to 36% of total Ebitda by 2013, though Chilean operations are expected to remain the biggest contributor, with 56%.
Celfin forecasts Sonda to see organic growth with a CAGR of 12% over the next three years.
"We expect the acquisitions made in Brazil (Telsinc, Softeam and Kaizen), Mexico (NextiraOne) and Argentina (Ceitech) to enable Sonda to cross-sell to new clients, improving overall revenues and margins in Latin America," the report reads.
Use this link to see the full report.