Infinite Group, Inc. (OTCQB: IMCI) stock is in rally mode, with shares surging more than 30% on 10X average trading volume since April 1st. What’s attracting the attention? Apparently, investors are positioning ahead of IMCI’s planned acquisition of Pratum Inc. Their interest is timely. That deal adds $4.4 million in revenues and opens the door to significant new market opportunities. Still, while that acquisition can be transformational, there’s plenty more revenue-generating firepower inherent to IMCI. Couple that fact with bullish guidance suggesting that 2022 could be its breakout year; IMCI, at current levels, presents a compelling investment opportunity.
Here’s the better news for those considering the IMCI value proposition. Despite the company being in its best operating position in history, shares can be bought at a roughly 35% discount from its 52-week highs. However, while that sale price is on today, it may not last much longer. And that’s not just an overzealous presumption; it’s a sentiment based on connecting the business dots that shows how this micro-cap cybersecurity provider can become a revenue-generating juggernaut in a cybersecurity sector not short on multi-million dollar opportunities.
Thus, at roughly $0.24 to start the new trading week, don’t be misled by its micro-cap share price. Instead, consider the opportunity one that’s likely too good to ignore. Better still, operating in a sector that has no borders, the IMCI consideration is more than compelling; it’s timely.
Cybersecurity Market Is Red Hot
In 2021, the cybersecurity services market offered $165.78 billion in contracts to providers. While that’s impressive by any standard, it’s just the tip of the iceberg. Within the next six years, the cybersecurity services market is expected to eclipse the $366 billion mark, more than doubling the already massive opportunities. But that number may also be a conservative one, especially with headlines suggesting that 21st century warfare is less physical and more digital. Thus, in addition to boots on the ground, cyber-warfare is also a part of the battlefield. And since it has virtually no restrictions on where it can attack, it can be the most dangerous weapon in a military arsenal. And if you don’t think that’s the case- consider this. Cyber criminals can do more than seek ransomware; they could turn off power grids, water supplies, parts of global commerce, and even basic infrastructure at local gas stations and supermarkets.
In other words, every government, business, and local municipality can be a target. Worse yet, size doesn’t matter. Disrupting even the smallest city’s services infrastructure can have a devastating impact on its citizens. Thus, for those thinking that global leaders aren’t paying attention, think again. Not only are they, but they are proactively seeking the help of experts in the sector to provide protection. Infinite Group included.
Keep in mind, industry behemoths like Cisco Systems ($CSCO), IBM ($IBM), and Microsoft ($MSFT) can’t service the world. Hundreds of companies will need to contribute to protect the masses. And that’s excellent news for IMCI and its investors, noting that in a sector where size matters less than expertise, Infinite Group is ideally positioned to contribute to the cause. Better yet, being fundamentally sound, well-capitalized, having cutting-edge cybersecurity technology, and managed by industry experts, IMCI is more than well-positioned, they are ready to cash in on the booming demand. They are doing that already.
Not only are they capitalizing on opportunities, they may have an advantage over some of its competition. Although it seems unlikely that a micro-cap company could outperform billion-dollar conglomerates, it’s true that they can by leveraging turn on a dime state-of-the-art cybersecurity technology that can respond quickly to a changing needs landscape. In other words, the biggest names in the sector often adapt their existing platforms to meet the needs of the clients. It sounds like a great plan but the truth is is that by not creating a specialized company-specific solution, vulnerabilities can exist. IMCI, on the other hand, doesn’t create modified one-size-fits-all security platforms. Instead, by being business nimble, they can design and deliver what many others can’t- a company-specific cybersecurity defense platform that protects a company’s valuable assets from the inside out. It’s a differentiation that brings significant competitive advantages to the IMCI proposition.
Moreover, it keeps multi-million dollar projects more than in the crosshairs; it keeps them in play.
Cybersecurity Platforms For The Masses
Most simply put, IMCI is a cybersecurity services provider to the masses. And Infinite Group appears ti know this, staying in its lane to provide small to medium sized companies with designed-to-order cyber defense systems. And that focus allows them to capitalize on revenue-generating opportunities from the millions of businesses that need and want what IMCI is selling. The better news is that while millions of deals could be in play, inking deals with only a few thousand clients would deliver the kinds of revenues that send IMCI share prices exponentially higher. Moreover, because IMCI understands that effective cybersecurity combines computer code and knowledge of the human mind, reaching sales milestones this year is more than wishful thinking; it’s probable. Client companies recognize and appreciate that proactive package.
They should. Effective cybersecurity is more than implementing innovative technology; it’s about people. After all, businesses are run by people, threat actors are people, and IMCI customers are people. So in that respect, cybersecurity isn’t a technology business; it’s a people business. And understanding people and how they act is the difference between designing a one-size-fits-all platform and a company-specific tool that protects businesses from bad actors and devastating cyber attacks. Infinite Group platforms are the latter.
Infinite Group will be the first to tell its clients that they don’t sell products; they solve problems. That’s accomplished by challenging the complexity inherent to cyber defense to create a platform that makes sense for a unique business. Keep in mind that not all security is created to protect from outside threats; insider threat is just as serious. Notably, many companies don’t consider the exposure left when not addressing that potential. Failure to do so leaves them vulnerable to attacks from the inside disrupting financial, medical, retail, legal, infrastructure services, and manufacturing assets. Remember, cyber crime isn’t a phantom creation, it’s developed by people, and bad actors can come from inside or out. Infinite Brands makes sure its clients understand the full scope of protection. Better still, they can fill the voids left by others.
Not only that, its business model is inclusionary, maximizing a nationwide workforce to serve organizations on all levels of Information Security and Cybersecurity, utilizing its award-winning Nodeware® SaaS to provide best-in-class cybersecurity functionality. It’s an industry-leading product and one of the few that continuously scans networks to identify critical vulnerabilities. More than an excellent choice by clients to secure data, systems, and technologies, Nodeware® is a staple in accelerating IMCI’s already impressive growth and positions them to stay a leader in the cybersecurity sector. Case studies back that claim, with data showing how client-specific security integration can provide comprehensive cyber protections. Those results are powerful statements to help accelerate IMCI’s penetration into a number of multi-billion dollar sectors.
Those statements are getting heard. And as a result, IMCI is doing more than attracting attention; they are inking deals. In investors language, deals translate to revenues, which generally lead to higher share prices. Thus, good news for IMCI is excellent news for its shareholders.
Analysts Expect A 225% Surge
Analysts support the bullish proposition. Goldman Small Cap Research recently updated its report modeling for IMCI stock to appreciate by more than 225% over the next twelve months. His target of $0.65 is based on opinion that IMCI’s strengths are precisely what the cybersecurity markets need. He further substantiates the bullish vibe by noting cyber vulnerabilities rank as the top concern for companies, including small businesses, which was noted in a Allianz Risk Barometer update. Moreover, that report exposes the primary driver behind the IMCI investment proposition- IMCI’s opportunities don’t need to compete against the sectors biggest players.
Instead, they can target more low-hanging opportunities and tap more quickly into demand from a market where Accenture’s Cost of Cybercrime Study showed that 43% of cyber attacks target small businesses. By the way, only 14% of those attacks directly targeting them, showing just how vulnerable businesses can be even when not targeted. While deliberate or not, that exposure creates additional revenue-generating opportunity for IMCI, and the deployment of its SaaS-based Nodeware® platform may be the ideal tool to fend off attacks and provide broad-based cyber protection. Guidance indicates that sales from that platform will ramp in 2022 and, by 2023, will become an appreciable high-margin revenue driver.
There’s more to like.
Acquisition Of Pratum Inc.
Adding more value to the Infinite Group investment proposition is its planned and imminent acquisition of Pratum, Inc.. That accretive deal adds more than $4 million in new revenues, profit, and a significant client book. That deal is expected to close this quarter and will bring more than financial windfalls, it adds complementary services and products to enhance IMCI’s already impressive services portfolio. And since Pratum adds immediate revenue-generating firepower, the closing could accelerate additional acquisitions and expedite potential partnerships in a consolidating sector. Best of all, Pratum’s revenues to not look to be factored in to its current share price, meaning the closing could spark a rally.
Goldman thinks so. His report notes that peer valuations in the industry score price/revenue multiples at 11.1X. Using forecasted 2022 sales and an estimated $11 million run-rate post-acquisition, as well as a lenient discount multiple compared to peers, justifying a $0.65 price target is more than reasonable. In fact, factoring in IMCI’s planned NASDAQ uplist, cross-selling opportunities, and the potential for additional M&A activity, models justify a valuation closer to one-dollar. Thus, with its 10-K filing in the queue, expect managements commentary to be closely listened to. After all, results will be historical; it’s the guidance investors will be focused on. And taking clues as given, especially on the hiring front, the lead should be bullish. Companies typically don’t fortify a team without the business to support the expenses. Thus, it’s a clue that may foretell as least part of 2022 guidance.
An Appropriate Valuation Is Warranted
Other clues are also front and center. In-play is the revenue-generating firepower from deploying cutting-edge Nodeware®, its SaaS-based vulnerability management platform targeting small and medium-sized enterprises. In addition, management commentary post the pending Pratum acquisition is likely to explain how the milestone acquisition can become a 2022 catalyst. Remember, in addition to getting Pratum’s revenues, its assets favorably complement IMCI’s overall business and open the door for considerable cross-sale opportunities. That’s where Goldman noted that revenue projections noted in its models could significantly miss the mark.
More specifically, they can be appreciably higher, which would explain the recent company-wide team buildup. Remember, too, more jobs, including management positions, are posted on the IMCI website. The inference to be made is that better times are ahead. It’s a speculative statement, but well-leveraged.
Better Positioned Than Ever For 2022 Surge
So, does the sum of its parts make a compelling case for IMCI investment consideration? In a word, absolutely. Moreover, the case is strong now; post Pratum, it gets significantly stronger. Thus, as is often the case, trading ahead of expected news, especially the catalyst kind, can deliver potentially exponential returns near and long-term. While IMCI probably won’t spike to Goldman SCR’s $0.65 target overnight, earnings milestones along the way should certainly create the path.
Thus, better positioned than ever and with transformative deals in the crosshairs, taking advantage of an undervalued IMCI may be a wise and timely consideration. Furthermore, it’s never a bad idea to invest in excellent companies in a booming sector. IMCI meets that standard. So, while 2021 was an impressive year, 2022 can be transformational. And even accounting for IMCI stock’s 50% move higher since March 15th, there is plenty of room to the upside to make current levels an ideal entry point for new investors. Consider seizing the opportunity.