Infinite Group, Inc. (OTCQB: IMCI, $IMCI) stock is indeed outperforming the markets, higher in April by more than 75% on Tuesday. But according to Goldman Small Cap Research, there could be plenty more gains in the crosshairs. In fact, despite the impressive MTD run, Goldman models for an additional 132% upside before striking his $0.65 target. And as part of a red-hot cybersecurity sector, he may be spot-on in his analysis. (*share price of $0.28 on 4/26/22, 10:57am EST)
Indeed, IMCI's sum of its parts justifies reaching Goldman's lofty forecast. That's because, in addition to a healthy dose of organic growth, IMCI is about to close its transformative acquisition of Pratum Inc., a deal expected to add at least $4 million in new revenues and strengthen an already impressive cybersecurity platform. Not only that, the deal opens new doors of significant revenue-generating opportunities and accelerate an already aggressive pace of penetrating a multi-billion dollar cybersecurity sector. Hence, while the stock took a breather on Tuesday, the next leg up could be starting despite broader market weakness.
It's a more than likely proposition. After all, from the long side of the investment perspective, IMCI's substantial market opportunities in play today are only getting stronger. And they should be valued accordingly. Moreover, aside from the EV space, no other market demands as much attention as cybersecurity. And that puts Infinite Group in the right sector at the right time. Not only that, they have the right products to sell, making the IMCI investment consideration more than attractive; it's compelling.
In total, it's enough to keep IMCI stock green.
Cybersecurity Markets In Focus
That's no surprise to those already capitalizing on the disconnect between Infinite Group's share price and established intrinsic value. However, while intrinsics are strong, the inherent value of what IMCI can unleash post-acquisition of Pratum takes the investment thesis to a much higher level. Thus, while an excellent opportunity today, it will get even better, especially with IMCI appreciably better positioned to maximize in a market expected to dish out more than $366 billion in deals within the next six years. That's per year, not an aggregate.
But even that lofty expectation isn't the likely stopping point. The need and demand for cybersecurity are skyrocketing. With cyber-warfare threats making headlines, companies and governments worldwide are taking protective actions against borderless attacks faster than ever. The decision to do so is prudent and timely. After all, no organization is immune from a cyber-attack, irrespective of country, industry, or size. Moreover, today's threats go well beyond locking up computers for ransomware and phishing attacks; cyber-crimes target disabling critical infrastructures like power grids, water supplies, communications networks, and even defense systems.
And stopping those attacks will take far more defensive firepower than the handful of industry behemoths like Cisco Systems ($CSCO), IBM ($IBM), and Microsoft ($MSFT) can provide. Indeed, they may get the lion's share of the business. Still, even so, potentially hundreds of billions remain in play for competitors, like IMCI, that can fill the services gap by providing a massive client potential with best-in-class company-specific cybersecurity solutions. So, in addition to IMCI being in the right sector with the right solutions at the right time, they could become a revenue-generating juggernaut in the process.
Deserving Of A Higher Valuation
That's not an overly enthusiastic presumption. Infinite Group is ideally positioned to earn a significant share of the billions of dollars in play with sophisticated and scalable technology. And IMCI has more than superior technology to offer; they are also managed by industry experts that know how to get products into clients' hands. That lucrative combination puts IMCI in the best operating position in its history and, better still, sets up 2022 to post a significant number of new contracts that could drive revenues far past even the most bullish forecasts.
Remember that this is a sector where size doesn't matter. Proof of concept trumps all, and IMCI is demonstrating that its cybersecurity solutions are an industry-best option that has the potential to outperform even the most established industry giants. That's not a stretch. The reason being is that IMCI's agile approach to its opportunities includes implementing organization-specific cyber-defense platforms allowing for more specialized and comprehensive solutions. Many of the larger companies in the space modify broader platforms, leaving gaps in security. In other words, a one-size-fits-all cybersecurity platform isn't ideal. Instead, companies need iron-clad protection from external and internal cybersecurity threats. By working closely with clients, IMCI meets that need, creating standalone solutions that protect company assets, team, and brand.
And with case studies showing that IMCI can protect different types of businesses from diverse sectors, its cyber-defense solutions could earn significantly more attention this year. Of course, doing so leads them in the direction analysts expect- higher revenues, a more appropriate valuation multiple, and a substantially higher share price.
Leveraging Experience in Technology and People
Indeed, Infinite Group has proven it has the products. Moreover, they weren't built from a common mold. Different about IMCI is that they created cybersecurity technologies with people in mind. That integration may sound like a standard inclusion, but it's not. Many off-the-shelf cybersecurity products aren't built with the human psychology in mine. Instead, they are created to embed roadblocks through specific software channels to divert an attack. Infinite Group knows that's not the best and most effective approach.
In fact, Infinite Group is the first to point out that its business model is about understanding the human psyche as much as the security system itself. In other words, knowing that cyber-attacks are created by people, spread by people, and updated by people, a practical solution needs to implement defenses against the human element. That's the only way a company can be fully protected from unique, evolving, and challenging problems posed by bad actors that unleash potentially devastating attacks.
But, getting that security only comes after companies address the cybersecurity concerns from the inside. And this is the area in which Infinite Group's solutions have a leg up on even more prominent competitors. IMCI ensures that clients are protected from the inside out against attacks on financial, medical, personnel, proprietary, and countless other sensitive resources.
Further, to tap into the massive demand, Infinite Group's inclusionary business model is facilitated by a nationwide workforce serving client demand for information, security, and cybersecurity needs. They are capturing that demand through its award-winning cybersecurity SaaS, Nodeware®. Unlike many other comparable products, Nodeware® constantly scans networks for vital security breaches.
In addition to providing clients with best-in-class cybersecurity solutions, Nodeware® is a significant value-adder to Infinite Group's already impressive portfolio of assets. As a matter of fact, the SaaS product plays an essential role in accelerating the company's mission to target billions of dollars of market opportunities. This isn't just a baseless claim, either.
Case studies by IMCI demonstrate the benefits to clients from Infinite Group's client-specific cybersecurity solutions, backing IMCI's claim of providing only state-of-the-art cyber protection.
Analysis Forecasts 86% Higher Price Target
Here's better news- optimistic sentiments don't just come from Infinite Group and its investors. Analysts at Goldman Small Cap Research model for IMCI's stock to appreciate by more than 86% to $0.65 over the next year. That bullish forecast comes as Infinite Group continues to show that its individualized cybersecurity solutions address what clients are demanding and, moreover, is ideally positioned to capitalize on a cybersecurity market in hyper-growth.
Notably, a recent Allianz Risk Barometer update says that cybersecurity is among the top concerns for companies, even small ones that may have previously been less threatened. What's more, Goldman has reported that Infinite Group may not have to compete against some of the sector's most established firms to find success.
He sees strength in Infinite Group's ability to provide services that appeal to a broader client base, especially small businesses. Accenture's Cost of Cybercrime Study reported that 43% of cyber-attacks target small businesses, exposing that small businesses are vulnerable to the same cybersecurity threats. That need boosts the demand for specialized services further. Thus, a massive under-targeted market could translate to an enormous increase in revenues. Indeed, that's a proposition in IMCI's crosshairs.
Moreover, it's within reach through its Nodeware® platform, a flagship product expected to drive revenues higher this year and gain traction to accelerate revenue growth exponentially in the years after.
However, Infinite Group's Nodeware® platform isn't the only contributor to the company's bullish outlook. IMCI is about to add significantly more revenue-generating firepower.
Transformative Acquisition Imminent
That results from its imminent acquisition of Pratum, Inc., a $4.4 million revenue-generating company that adds additional technology strength and a substantial client base. Post-acquisition, IMCI gets much bigger faster. And more than boosting the financials, its asset portfolio is enhanced with synergistically aligned products and services. It's a deal that can keep on giving.
What's more, IMCI's acquisition of Pratum may not be the last in the near term. Adding Pratum's revenue could help accelerate the completion of future acquisitions or partnerships. Thus, there is too much in play to not evaluate IMCI as a company growing at mega speed. Again, Goldman suggests IMCI and its investors may soon get rewarded.
One of the key takeaways from Goldman SCR's analysis is that comparables in the cybersecurity industry are modeling price/revenue multiples at 11.1X. Using the company's projected sales in 2022 alongside an $11 million run rate post-acquisition and a discount multiple similar to peers, he says a $0.65 price target is justified. However, factoring in the company's planned NASDAQ uplist, opportunities for cross-selling, and the possibility of additional M&A activity positions, a more aggressive price target approaching the dollar mark may very well be in play. Keep in mind, too, that Infinite Group has been on a hiring spree, and companies not expecting significant growth certainly don't hire at the pace of IMCI. Reading between the lines, it's a bullish tell.
Bottom line- there's a lot to like about Infinite Group.
Looking Forward to a Breakout 2022
Furthermore, when evaluating Infinite Group on a simple sum of its parts, the value proposition at current prices is an attractive proposition and perhaps too good to ignore. Indeed, even pre-acquisition of Pratum, IMCI can justify a higher price. But, with that said, the move higher in recent weeks has been appreciable, sustained, and comes on much higher than average trading volume. Thus, while it's noted that IMCI is in the right place at the right time, so are its investors.
Better yet, that place may stay in fashion for quite a while, noting that Infinite Group is in its best operating position in history, is led by an experienced management team, has industry-leading products in a multi-billion dollar cybersecurity category, and will soon close a transformative acquisition that adds more than $4 million in new revenues. Indeed, finding considerably undervalued investment opportunities in an industry as explosive as cybersecurity may be rare, but IMCI is proving itself as one. And investors are taking notice.
As a result, the larger window of opportunity open since March is starting to close; rather quickly. Chalk that up to early investors likely seeing what others soon should- milestones are about to become catalysts, which, for investors, provide a compelling reason for investment consideration. Better yet, action.
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