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SYTA: Initiating Coverage - Inflection Point in 2H21 for Sales Growth & Higher Margin Exposure to the United States

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By Tim Moore, CFA



Initiating Coverage

We initiate coverage of Siyata Mobile Inc. (NASDAQ:SYTA) with a valuation price target of $16 per share. Siyata Mobile is a developer and provider of cellular communication systems for enterprise customers and first responders. The company’s solutions include in-vehicle mounted communication devices, rugged smartphones and cellular signal boosters.

The company targets vehicle fleets, ambulances, school busses, police vehicles, utility fleets, industrial and residential customers. It develops and manufactures under the Siyata brand name and licenses the Uniden® brand name for its UV350 in-vehicle device, its cellular signal boosters and some of its rugged smartphones.

The company is a beneficiary of first responders need for next generation communication known as Push-to-Talk over Cellular (PoC). PoC is the next-generation solution displacing traditional Land Mobile two-way radios (LMR). LMR does not have as much coverage area or reliability of communication for emergencies and outdoor workers. PoC also has considerable cost savings.

The recent buildout of a nationwide public safety network, FirstNet (First Responder Network Authority), should help PoC adoption and share gains away from LMR.

Qualifications with major North American carriers in 2019 & 2020 are beginning to bear fruit for 2H21 after the company created dedicated sales infrastructure to serve AT&T (T) and Verizon (VZN). Sales growth catalysts include its flagship in-vehicle device (UV350) for first responders, yellow school buses and commercial vehicles.

The company is also benefiting this year from a sales surge for its cellular signal strength boosters. We estimate that revenues in cellular boosters can triple in 2021 from 2020. Demand is fueled by rural parts of the US, outdoor workers (fires, disasters, etc.), residential landline cutters (switching over to solely cell phones), home offices boom and remote workers. Retailers, manufacturers and utility fleets are becoming more interested for enhanced and secured coverage.

As previously announced, the upcoming new launch of a Mission Critical Push to Talk (MCPTT) handset in North America could help revenue growth in late 2022 and 2023.

We highlight these interesting catalysts and aspects, which are detailed in our initiation report:

1. Sales Growth Acceleration Expected for Its Higher-Margin End Markets

2. Scalable Revenues & More Diversified

3. First Responders & FirstNet with UV350 Offering

4. Cellular Boosters for Signal Strength

5. Yellow School Buses Opportunity

6. Upcoming New Product Launch Could Be Disruptor

7. Profitability Inflection Point in 2022

We value Siyata Mobile using a peer comparables valuation methodology based on EV/Sales for 2022 estimates. We reach a valuation of $16 price per share by applying the peer group average of 2.9x EV/Sales 2022. Compared to SYTA trading at 1.2x our 2022 Sales estimate and 2.2x our 2021 estimate.

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