BlackBull Research Initiates Coverage of Rakon: Calls for Dividend to Unlock Shareholder Value

BlackBull Research has initiated coverage of Rakon (RAK), a leading technology company in New Zealand, while echoing calls by significant shareholder Mike Daniel for the company to issue a dividend. In the report, BlackBull Research's senior analyst Eden Bradfield recommends that Rakon offer a dividend of up to 25%, five percentage points higher than the call made by others. This move, according to Bradfield, would increase investor confidence and unlock the true value of the company, which has underperformed with a +19.00% decline year-to-date and a 50% drop on a rolling yearly basis.

"Rakon is worth at least $1.40 per share based on peer multiples, and instituting a dividend would be a significant catalyst for the stock's growth," said Bradfield. He also noted that Rakon has a strong balance sheet and positive cash flow with very little debt.

While Rakon pledged to offer a dividend if the company achieves its FY2022 forecasts during its 2021 ASM, it has made no move to indicate that a dividend is on the horizon, according to Bradfield. "Instituting a dividend of this magnitude and at this point in time is the best way for Rakon to demonstrate their financial strength to investors. We think management should be pulling up their proverbial socks and questioning why, in a year where the tech-focused NASDAQ has moved +17%, the stock of NZ’s foremost pure-play tech company is down significantly. We recommend that management consider either stock buybacks or a dividend, both of which would make sense given Rakon's low multiple," Bradfield added.

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After 7 years of market-beating recommendations, the independent research firm ATM Strategy was merged with and acquired by BlackBull Markets creating BlackBull Research.

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