Is it time take a position in Big Sofa ahead of results next month? (BST)

The share price of Big Sofa Technologies (LSE:BST) has been bobbing along in a range of 12-16p for some time now. After previously announcing disappointing sales figures, the share price dipped to an all-time low of 11.8p – some way off from the original IPO price of 17p and last years high of 29.6p. Is it time to reconsider the video analytics firm?

Two months ago, Big Sofa (LSE:BST) received a £3m investment from Ipsos, one of their biggest clients and a strategic sales partner. The investment was made at a premium with Ipsos paying around 18.3p per share. I imagine Ipsos is in a very good position to judge the business potential of the company, and their increased investment is a strong sign of support. What’s more, Big Sofa is due to reveal its results at the end of June. These should hopefully confirm good progress is being made by the business as implied in their trading update RNS back in January when CEO, Simon Lidington stated ‘revenues in the second half of 2017 significantly outweighing the first half’. Convincing numbers could transform sentiment towards the company and initiate a re-rate back above the IPO price of 17p and onwards towards those previous highs.

Chartwise, the share has been making steady progress from its lows in a well established upward price channel. Recent price action has seen a pullback, possibly forming a bull flag ready for a continuation of the price recovery. Although the past couple of occasions have resulted in a failure to continue bullishly, at some point the stock is likely to break ranks – it just needs the right trigger, and the forthcoming results might offer the required impetus for such a move.

Author: Stuart Langelaan

Disclosure: The author does not own shares in the company mentioned in this article

 

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