Infinite Group, Inc. (OTCQB: IMCI, $IMCI) shares are surging, jumping by more than 108% since March 2nd to $0.25 on Tuesday. The better news- the spike results from a more than 10X increase in trading volume compared to 2021 averages. And for those that pay attention to the adage, "volume precedes price," it may provide a clue for more gains to come.
After all, that volume increase isn't without reason. Investors are likely positioning ahead of Infinite Group's transformative acquisition of Pratum, Inc. and taking advantage of an undervalued investment opportunity in a company doing the right things in the right sector at the right time.
Keep in mind that IMCI is worthy of appreciation based on current operations. Still, with Pratum expected to add $4.4 million in new revenues and open the door to significant new market opportunities, factoring in a forward-looking multiple on the totality of income and assets is indeed reasonable. But even at the $0.25 level, there's still considerable value not realized in the IMCI proposition. In fact, the combination of revenue-generating firepower post-acquisition puts IMCI in its best position ever to create significant shareholder value in the coming weeks and quarters. Hence, investment consideration is more than warranted; it's timely.
Moreover, it only takes a simple connecting of the business dots to show why the disconnect between share price and assets is too big to ignore.
Video Link: https://www.youtube.com/embed/Y4OTr2kiMc8
A Red-Hot Cybersecurity Sector
The starting dot is prominent. Infinite Group is part of a red-hot cybersecurity sector with no shortage of global revenue-generating opportunities. In fact, the cybersecurity services market served up more than $165 billion in contracts last year. But while substantial in 2021, by 2028, that market is expected to more than double to $366 billion. Of course, with global discourse in high gear, even proffering that lofty increase may be conservative, especially with 21st-century warfare getting as digital as it is physical. And because cyber-warfare is borderless and can attack networks from Main Street to the largest global conglomerates, it should be considered the most dangerous weapon in a military arsenal.
Remember, infrastructure, from municipal water supplies to intricate weapons systems and everything in between, is powered by the technology revolution. In other words, computers control virtually every aspect of daily life, including eating and drinking, filling cars with gas, having public lighting, and enabling retailers to open and close cash registers. Worse, beyond the ransomware headlines usually associated with cyber-crime, the most significant threats from a cyber battle are that bad actors can turn off power grids, water supplies, global communications systems, and even vulnerable defense systems. Yes, the ramifications of a successful cyber-attack can be devastating.
But the excellent news is that there are ways for governments, businesses, and local municipalities to protect themselves, and as shown by the pace of growth in the sector, many are doing just that. The excellent news for Infinite Group and its investors is that IMCI is becoming an essential part of the services provider conversation. After all, the small handful of behemoths in the cybersecurity sector, including Cisco Systems ($CSCO), IBM ($IBM), and Microsoft ($MSFT), can't haul the load on their own.
And the gap left between service from the industry giants and client is precisely what Infinite Group intends to fill. Keep in mind that the gap isn't a small opportunity. It's a multi-billion dollar one that can meet demand from thousands of businesses and potentially hundreds of government offices worldwide.
Bigger Than Its Share Price Suggests
Those thinking IMCI's share price accurately reflects the company's intrinsic value should reconsider. Not priced in is that Infinite Group is ideally positioned to accelerate clients signings, fundamentally sound, well-capitalized, has cutting-edge cybersecurity technology, and is managed by industry experts to capitalize on several areas of market demand. Moreover, IMCI is already capitalizing on opportunities.
IMCI may even be able to outperform even the sector leaders. That's because in an industry where company size is much less a consideration over technology, being able to respond quickly to changing needs in a dynamic cybersecurity technology landscape does. And IMCI can, by being business agile and implementing company-specific cybersecurity defense platforms that protect a company's valuable assets from the inside out. Put another way, they not only address vulnerabilities from the outside but also from the inside. It's a differentiation that makes IMCI's solutions perfect for any size business and public sector clients.
In simplest terms, IMCI is a cybersecurity services provider to the masses. And Infinite Group appears to embrace its role by targeting cybersecurity contracts from small to medium-sized companies with designed-to-order cyber defense systems that not only provide businesses what they need but can also generate millions in revenues in the process. With thousands of client opportunities, signing only a few hundred can exponentially increase IMCI share prices.
And because IMCI builds cybersecurity platforms combining computer code and knowledge of the human mind, it's a platform more understood by its target clients. This critical distinction could lead to IMCI inking many new deals and reaching sales milestones this year.
A Technology And People Business
That's likely, noting that effective cybersecurity is more than implementing innovative technology; it's about people. After all, people run businesses, 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.
As part of that, Infinite Group is the first to say that they don't sell products; they solve problems by challenging the complexity inherent to cyber defense to create a platform that makes sense for a unique business. Further, IMCI knows that not all security is designed to protect from outside threats; insider threat is just as serious, and many companies don't consider the exposure left when not addressing that potential. Not doing so leaves them vulnerable to attacks from the inside, disrupting financial, medical, retail, legal, infrastructure services, and manufacturing assets.
Remember, cybercrime 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. Then, they design platforms and protections that address and fill specific client needs.
These systems are created through its inclusionary business model, 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. Nodeware® is an industry-leading product and one of the few that continuously scans networks to identify critical vulnerabilities.
And 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. They offer plenty of case studies to support that claim, showing how its company-specific cybersecurity integration can provide comprehensive cyber protection. By the way, clients aren't the only winners in the process. Nodeware® is also helping accelerate IMCI's penetration into several multi-billion dollar sectors.
Thus, good news for IMCI is excellent news for its shareholders.
Analysts Model For A 225% Increase To Price Price
Analysts are equally bullish on the IMCI proposition. Goldman Small Cap Research updated its report modeling for IMCI stock to appreciate by more than 160% over the next twelve months, founded on the opinion that IMCI's strengths are precisely what the cybersecurity markets need. Their $0.65 price target also considers that cyber vulnerabilities rank the top concern for companies, including small businesses, noted in an Allianz Risk Barometer update. Moreover, while there may be a presumption that the competitive landscape is crowded, Goldman doesn't think IMCI needs to compete against the sector's most prominent players.
Instead, he notes tremendous opportunities can be exploited in a market where Accenture's Cost of Cybercrime Study showed that 43% of cyber attacks target small businesses. Notably, only 14% of those attacks directly targeted them, showing how vulnerable businesses can be even when not the intended target. Still, while deliberate or not, that exposure creates additional revenue-generating opportunities 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. IMCI's guidance suggests that sales from that platform will ramp in 2022 and, by 2023, will become an appreciable high-margin revenue driver.
There's more to justify the bullish proposition.
Pratum Inc. Acquisition Adds $4 Million+
Adding more firepower to the Infinite Group investment proposition is its planned and imminent acquisition of Pratum, Inc. That accretive deal should add more than $4 million in new revenues, profit, and a significant client book to the IMCI portfolio. It will also bring more than financial windfalls; it adds complementary services and products to enhance IMCI's impressive services portfolio. And since Pratum adds immediate balance sheet strength, the closing could accelerate additional acquisitions and expedite potential partnerships in a consolidating sector. Moreover, the addition of Pratum's revenues appears to be lacking from IMCI's current valuation.
Goldman SCR certainly thinks so. They note that peer valuations in the industry score price/revenue multiples at 11.1X. Thus, using forecasted 2022 sales, an estimated $11 million run-rate post-acquisition, and a lenient discount multiple compared to peers, modeling for and justifying a $0.65 price target is more than reasonable. Better still, from an investor's perspective, factoring in IMCI's planned NASDAQ uplist, cross-selling opportunities, and the potential for additional M&A activity positions IMCI to target a share price closer to one dollar.
Thus, while its 10-K filing will be looked at for the numbers, management commentary could steal the show. After all, financial results will be historical; it's the guidance investors will be focused on. And paying attention to the clues given, especially on the hiring front, the sentiment should be bullish, noting that companies typically don't go on hiring sprees without the business to support the expenses. Hence, it's a clue that may foretell at least part of 2022 guidance.
An Appreciable Increase Is Warranted
That's not the only clue supporting the bullish proposition. Others are also front and center, including the revenue-generating firepower from deploying cutting-edge Nodeware®, its SaaS-based vulnerability management platform targeting small and medium-sized enterprises. In addition, expect management to add color to how the Pratum acquisition is a milestone that can become a 2022 catalyst.
Beyond the millions in new revenues, Pratum's assets favorably complement IMCI's overall business and open the door for considerable cross-sale opportunities. By the way, that's a stipulation Goldman noted that could impact revenue projections favorably in 2022, which could cause current models to significantly miss the mark.
Better said, revenues can be appreciably higher, which would explain the recent company-wide team buildup. Also, hiring continues, with more jobs, including management positions, posted on the IMCI website. The inference to be made is that better times are ahead.
Expecting Good Things In 2022
Indeed, the sum of IMCI's parts indicates that that is the case. Moreover, while that sum is supportive of an appreciably higher share price today, post-acquisition, it gets significantly stronger. Thus, trading ahead of that expected closing may be a timely considerable to benefit from a tailwind of a deal that immediately supports a considerably higher share price. Keep in mind that analysts predict that deal to usher in stock prices closer to $0.65, and revenue milestones reached along the way could fuel momentum toward achieving that target.
Clearly, investors realize the value left exposed in the current IMCI price. Accordingly, shares have been bid higher by more than 108% since last month, and momentum into this week has not been weakened. That's understandable.
Infinite Brands is in its best position ever to create near and long-term shareholder value. And with transformative deals in the crosshairs, taking advantage of an undervalued IMCI may be a wise and timely consideration. After all, investing in companies in the right sectors at the right time typically generates exceptional near and long-term results. And with Infinite Brands part of a red-hot cybersecurity sector, those potential gains could come much sooner than later.
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