Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Cynergistek (CTEK) Is “Good Business Inside a Bad Business” Company: Investor

Long Cast Advisers recently published its Q1 Investor Letter (you can download a copy here). The Brooklyn, New York-based investment firm talked about its top five positions in the letter, including Cynergistek Inc (NYSEAMERICAN:CTEK) – which is a California-based cybersecurity and information management consulting firm serving the healthcare industry. Long Cast Advisers made some important comments regarding Cynergistek in the letter, calling it a “good business inside a bad business” company. Here is everything that Long Cast said about the company:

Cynergistek [is] a “good business inside a bad business” company. The “bad business” is the low growth, low margin Managed Print Services, which represents the bulk of revenues but a fraction of the CF. The good business is the high growth, high margin Cybersecurity Consulting and Staffing business, acquired in January 2017.

abstract, access, background, cell, chart, cloud, computer, computing, concept, data, desktop, electronic, email, file, firewall, graph, illustration, information, infrastructure, internet, laptop, mobile, mobility, modem, network, networking, pc, phone, protection, security, server, smart, system, tablet, technology, wifi, workstation

Copyright: hywards / 123RF Stock Photo

Talking about opportunities, Long Cast Advisers said:

CTEK trades at a discount to other companies in the consulting/staffing industry so if cash earnings grow with continued mix shift towards the high margin cybersecurity offering, investors should win on earnings growth, re-valuation and the value accruing to equity shareholders as debt is paid down. While the business is competitive, the company ranked highly for the 2nd year in a row as a healthcare focused cybersecurity vendor. Access to talent through military pipeline is a differentiating advantage.

Nevertheless, there are challenges to the thesis, according to the investor.

The customer base – healthcare institutions and hospitals – doesn’t have the fattest wallet. The sales cycle is long and slow. Customers tend towards smaller institutions which are potential consolidation candidates. We view the opportunity to expand into new markets (education / academia) as the biggest offset to these primary risks.

Cynergistek Inc (NYSEAMERICAN:CTEK) is a cybersecurity and information management consulting firm that provides services to the healthcare industry. It offers services and solutions to organizations for privacy, security, compliance, and document output management. Over the past three months, the company’s stock has plummeted around 4%. Meanwhile, over the last 12 months, the share price has dropped nearly 8%, according to Morningstar.