BofA Evaluates MeridianLink On 4 Ms, Initiates At Buy

MeridianLink, Inc. MLNK does well in the four-M framework for software investing, which includes market, competitive moat, management strength and margin potential, according to BofA Securities.

The MeridianLink Analyst: Koji Ikeda initiated coverage of MeridianLink with a Buy rating and a price target of $35.

The MeridianLink Thesis: The “commentary from our due diligence calls was very positive on MeridianLink’s value proposition,” Koji said in the note.

The analyst elaborated on the four Ms:

• Market: The market size is estimated at $7.8 billion and the company is poised to “disrupt and take share, which should enable the business to drive low to mid-teens organic growth in the future,” he wrote.
• Moat: The business “has a good competitive Moat” driven by a high-quality technology platform, high customer satisfaction levels, a wide range of products, a large installed base to cross-sell and upsell, and a successful merger and acquisition strategy.
• Management Strength: “We believe Management is viewed as good operators, which is a good starting point to build on as a newly public company,” the analyst mentioned.
• Margin Potential: Koji added that the company’s business “has the potential to drive sustainable 40%+ adjusted EBITDA margins.”

MLNK Price Action: Shares of MeridianLink had risen by 1.69 % to $25.91 at the time of publication Monday.