Buy Quisitive Technology for exposure to Microsoft cloud, Focus Merchant Group says

With enterprise businesses continuing their migration to cloud-based software and services, tech consulting firm Quisitive Technology Solutions (Quisitive Technology Solutions Stock Quote, Chart TSXV:QUIS) is now reaping the rewards, according to analyst Ralph Garcea of Focus Merchant Group, who in a research update this week singled out Qusitive as one of the only pure-play ways to invest in cloud sector champion Microsoft Azure.

Formed by Fusion Agiletech Partners who bought Quisitve LLC in February of this year before commencing trading on the Venture Exchange in August, Quisitive aids enterprise customers in shifting to cloud services as well as emerging technologies such as Artificial Intelligence, machine learning, Internet of Things technology and blockchain platforms.

The company recently reported its third quarter financials, featuring revenue up 5.5 per cent quarter-over-quarter to $3.23 million, a gross profit increase of 3.3 per cent over Q2 and an Adjusted EBITDA loss of $649,000. (All figures in US dollars unless noted otherwise.)

Garcea points to Gartner estimates that global IT spending will reach $3.8 trillion in 2019, with the global public cloud services market expected to increase to $206 billion next year, up 17.3 per cent over 2018 and accounting for 5.4 per cent of overall IT spending.

And with the cloud-services battle seemingly down to two contestants, Amazon AWS and Microsoft Azure, Quisitve with its proprietary Azure Accelerator program is set to benefit, Garcea says.

“Given Microsoft’s dominance in the enterprise space, [Microsoft] is well-positioned for significant growth in 2019 and beyond, as are its preferred partners, including QUIS. In fact, QUIS is one of the only pure-play ways to invest in the growth of Microsoft Azure,” Garcea says.

The analyst highlights Quisitive’s ability to scale up, showing an 183 per cent increase in customer cloud assessment engagements, leading to a strong pipeline of projects.

“What’s important to note is that QUIS is quickly migrating from a Regional Microsoft Partner focused in a couple of geographic regions, to a National Solution Partner across different verticals,” he says. “In relatively short order, QUIS has expanded to six regions in the US, three key verticals (Oil & Gas, Financial Services and Healthcare), and expanded into Canada.”

QUIS’s share price took a 53 per cent leap yesterday, rising from C$0.13 to C$0.20, but still remains 42 per cent off its August 14 launch at C$0.35.

By consensus estimates, QUIS is trading at a 2019E EV/Sales of 0.8x versus its North American IT Services comparables currently trading at 1.2x.