The Globe and Mail reports in its Friday, Aug. 6, edition that Desjardins Securities analyst Kevin Krishnaratne has reiterated his "buy" recommendation for Converge Technology Solutions which he says is "undervalued" versus its peers. The Globe's David Leeder writes that Mr. Krishnaratne raised his share target by $2 to $13. Analysts on average target the shares at $11.25. Mr. Krishnaratne says in a note: "Given Converge's growing mix of software, managed services and cloud revenue, we see gross profit of $87.4-million for a margin of 23.4 per cent vs 21.9 per cent in 1Q, which was light given a large hardware-centric Canadian government contract. ... Trading at approximately 12 times 2022 EBITDA, Converge Technology looks attractive compared with North American peers at 15 times and European peers at 18 times. Our analysis of VARs across North America and Europe shows how Converge's organic gross profit growth of at least 15 per cent and EBITDA margin on gross profit of 30 per cent is comparable vs several peers. We continue to see upside to gross profit–related metrics via the layering of high-margin managed services revenue, such as its iSeries service, and as it leverages its recent acquisition of ExactlyIT."
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