03 December, 2018
We will be adding Benefit Focus $BNFT to our long trade ideas today.
$BNFT is a provider of cloud-based benefits management platform and services. The company’s platform allows organisations and individuals shop for, enroll in, manage and exchange benefits.
$BNFT operates in two business segments.
1. Employer: which derives its revenue from customers that use the company’s platform for the provision of benefits to their employees, and administrators acting on behalf of employers.
2. Carrier: which derives its revenue from insurance companies that provide coverage at their own risk. Its solutions support benefits plans, including healthcare, dental, life and disability insurance, and voluntary benefits plans, such as critical illness, supplemental income and wellness programs.
$BNFT is a $250+ million-a-year enterprise. It handles benefits for nearly 1,000 of America’s largest employers and its software is used by over 20 million people.
The company, however, has yet to turn a profit since it became =publicly listed. Management of the company believes that their platform has now reached critical mass and the company is on cusp of becoming profitable. Consensus analyst estimates are for the company to generate positive net income in the fourth quarter of 2018.
After a long history under largely the same management team, the company has undertaken a significant shake-up of the leadership team over the last two years. Shawn Jenkins, one of the founders of the company and its longtime chief executive, stepped down at the end of 2017. He decided in March to leave the company altogether, passing up a new role as an adviser to the new leaders.
The new management team appears to be far more focused on turning a profit and has also shown sign to be far more investor friendly. We are already witnessing a marked improvement in investor relations activity and in engagement of the brokerage community.
Overall, we think as awareness of the increases amongst investors and brokers and if the company turns a profit soon, the stock could re-rate to much higher levels.
Trade Ideas should not be considered as investment advice or a recommendation to purchase any particular security, strategy or investment product. References to specific securities and issuers are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.