Shares in Blackpearl Group Ltd (ASX: BPG) have fallen almost 80% over the past 12 months, but the analyst team at Bell Potter believes they can bounce back strongly.
The broker has just issued a new research note on the company with a speculative buy recommendation, and while they have cut their share price target almost in half, they still expect the company to increase substantially in value.
I’ll get to the specifics of their share price target shortly.
First, let’s look at Blackpearl Group’s most recent trading update issued just this week.
Business model evolving
The company said in a statement to the ASX that it now expects profitability on an EBITDA basis in FY28, after narrowing its quarterly loss by a third to $2.97 million.
The cloud technology company said it had reduced its cost base by about 27% compared with the fourth quarter of FY26, or about $9.4 million on an annualised basis.
During the quarter, the company had also struck a non-binding agreement with “one of the largest data providers in the United States: a private company serving Fortune 500 companies with B2B intent data and demand generation”.
Blackpearl Group added:
The partner works only inside a large enterprise customer profile and does not service SME US businesses. That demand is now referred to Blackpearl, which delivers data and platform as a service to those customers under a revenue share between 20% and 40%, depending on the type of deal. Blackpearl owns the customer relationship. The partner has an identified referral pipeline of 70+ companies, with typical deal sizes of US$10,000 to US$30,000 per month.
Blackpearl said since the partner originates the relationship, there was no upfront customer acquisition cost and payback is immediate.
They added:
Gross margin is high and the incremental cost to serve is low, so revenue from this channel flows largely through to EBITDAF. Onboarding is fast: Blackpearl already holds the underlying data asset, and the Pearl Engine applies its models over it. The partnership validates the Group’s DaaS and PaaS strategy, where Blackpearl’s data intelligence powers other companies’ products and revenue systems. Further distribution agreements are in negotiation.
ASX tech shares looking cheap
Bell Potter said the change in Blackpearl’s revenue model meant the broker had changed how it valued the company, moving from a recurring revenue model to a discounted cash flow model.
This had led to a drop in the share price target from $1.20 to 65 cents, compared to the current share price of 19 cents.
If achieved this would be a 242.1% return.
The post This small-cap ASX tech stock could more than triple in value: Broker appeared first on The Motley Fool Australia.
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