Beamtree Holdings Limited (ASX: BMT)

Beamtree Holdings Limited (ASX: BMT) is an Australian company specializing in artificial intelligence for decision support and data analytics. It offers automation technology and data solutions designed to assist healthcare providers. The company's operations are divided into several segments: diagnostic technology, clinical decision support, coding assistance and data quality, as well as analytics and knowledge networks.

Recommendation Rationale – SELL at AUD 0.33

• Trading Around Resistance: BMT’s share price surpassed its R1 level recommended on 21 August 2024.
• Overvalued Multiples: On a forward 12-month basis, the stock is trading at an EV/EBITDA multiple of 28.2x vs Industry (Technology) Median of 12.5x.
• Financial Performance:In FY24, the company reported losses of AUD 5.3mn as compared to a loss of AUD 6.9mn in FY23. Continuous losses can lead investors to question the company's viability and management's ability to execute its business strategy.
• Emerging Risks: Regulatory Constraints, Inflationary pressure, technology changes, labor shortages in the Australian market, and inflationary pressure on operating expenses.

BMT Daily Chart

Valuation Methodology: EV/Sales Approach (FY June'25E) (Illustrative)

Considering the revenue growth in FY24, high customer retention, effective cost management, and recurring revenue forecast, the stock might trade at a slight premium to its peers. For valuation, a few peers like Cyclopharm Ltd (ASX: CYC), Mach7 Technologies Ltd (ASX: M7T), and Adherium Ltd (ASX: ADR), have been considered. Considering that the stock has surpassed its R1 level, share price movement, other risks associated with the business, and downside indicated by the valuation, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 0.33, at 10:10 AM AEST, as of 25 September 2024.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 25 September 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.