It's not uncommon to see a blue chip stock pop on an analyst firm initiating coverage with a healthy upside price target. Well, it does happen in the small cap space too.
Take, for example, Stonegate Capital Partners after Wednesday's closing bell initiating coverage on Payment Data Systems, Inc. (NASDAQ:PYDS). The stock already had a nice day on Wednesday, climbing 13.2% to $1.63.
Today, though, the stock has exploded, running ahead 36.2% to $2.22 as of about 1 p.m. EDT after hitting a high of $2.33 in earlier action. The surge makes PYDS one of the top performing Nasdaq companies so far on Thursday.
Stonegate, a Dallas, TX-based advisory firm, specializes in working with small-cap companies it deems as innovative and undervalued.
Stonegate suggests that Payment Data Systems, a provider of integrated electronic payment processing services to merchants and businesses, has the potential to emerge as a leader in automated clearing house (ACH) and credit card payment processing.
Amongst other growth opportunities, Stonegate points out that the March 2017 announcement for PYDS to acquire Singular Payments, should the deal be completed, will increase the company's processed payments by about 15% and its processed transactions by about 20%, based upon the $440 million and 2.5 million transactions run through Singular in 2016.
According to San Antonio-based Payment Data Systems, the parties have agreed on all terms and the transaction is expected to close tomorrow.
The added transactions perhaps will help the company turn the corner financially. In the second quarter, Payment Data Systems reported revenue of $2.55 million, down by 11.8% from the year prior quarter, and a net loss of $534,337, or six cents per share.
For the first half of the year, revenue was down about $700,000 to $5.4 million from the same period in 2016 and net loss was $820,920, or 10 cents per share.
On the bright side of the quarterly report, the company had $3.2 million in cash and cash equivalents at the end of June and no debt.
