Avigilon jumps on solid earnings

away analyst expectations of seven cents per share.

“In the strongest quarter in Avigilon’s history, we delivered on our five-year revenue goal and generated record revenue and profit,” said Alexander Fernandes, the company’s founder and CEO. “With our revenue goal met, we plan to continue growing with a stronger focus on increasing profitability.”

Avigilon, which went public in 2011, was once one of Canada’s most successful tech IPOs, seeing its stock soar from $4.50 in 2011 to $33.49 at its peak. But rising research and development costs and intense competition from lower-cost Chinese manufacturers led to a steep decline in share price.

Shares closed at $11.20 Tuesday, sitting at their highest level since August.

While investors certainly welcomed the results, there were some concerns from analysts about a lack of clarity around the company’s core business. Avigilon does not break down its intellectual property licensing revenue, meaning that the company could have benefited from one or two large licensing deals, rather than acrossthe-board strength.

“While these results were better than expected, without a breakout of IP license revenue, it is difficult to determine the strength of the core business,” said Todd Coupland, analyst at CIBC World Markets. “A separate steady stream of recurring IP revenue would likely result in a higher multiple and share price.”

Coupland downgraded his price target on the stock from $14 to $10, rating the company a sector performer.

Other analysts were rosier in their outlooks. RBC Capital Markets raised its rating from sector perform to outperform Tuesday, while GMP Securities upgraded the company from sell to hold. BMO Capital Markets slightly raised its target from $11.50 to $12.

Analysts note that Avigilon is competing in what is becoming an increasingly crowded market. When the company went public in 2011, it was on the cutting edge of the high-definition surveillance market. But competitors have since emerged, including several from China, who are offering cheaper options.