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Key points
- Back in 1996 Apple was put back on track by the return of its founder, Steve Jobs.
- One ASX software share is taking similar action after merging with another one of its founder's companies
- A portfolio manager has shared his prediction for at least a 65% upside in the medium term
There is one ASX share currently walking a similar path to what Apple Inc (NASDAQ: AAPL) did before it became a US$2.83 trillion icon.
For those of you unfamiliar with the Apple of 1996, it was the year the late and great Steve Jobs made a return to the US tech company. At that time, the business was a far cry from the iconic electronic consumer device maker that is known for being today. Instead, the company was in turmoil after Jobs left years earlier.
After struggling for years in Jobs' absence, the Apple board struck a deal to merge with the computer company Jobs had created after leaving Apple known as NeXT. Following this, the visionary brilliance of Jobs went on to shine — and the rest is history.
However, it is an ASX share that is resembling a modern-day equivalent of Apple.
Which ASX share is using Apple's 1996 playbook?
While the name Matthew Sandblom may not be as recognisable as Steve Jobs, his return to 3P Learning Ltd (ASX: 3PL) is reminiscent.
Sandblom originally founded the teaching software company back in 2003 with Shane Hill and Tim Power. From its inception, the educational product provider took off with its Mathletics offering, landing deals across Australia and internationally.
Unfortunately, momentum unraveled following the departure of the company's original founders. In 2014 3P Learning made its debut on the ASX. Since then, profitability has been patchy despite a steady top-line throughout the years.
This lack of direction for the company's educational products and growth was reflected in the share price. Between 2018 and 2020, the 3P Learning share price fell approximately 50%.
In an attempt to avoid an opportunistic takeover from competitors, Sandblom took action and merged his second education venture — Blake Elearning — with 3P Learning. In the process, the original founder has resumed the position as chair. Additionally, Sandblom is now 3P Learning's largest shareholder with a 49% holding in the company.
Taking a leaf out of Jobs' book, Sandblom has shaken things up since his reunion with 3P. For example, around $9 million worth of synergies have been realised and co-founder Shane Hill has rejoined the business.
Already, the entrepreneur has mapped out a more ambitious future for this ASX share. The merged company is targeting a less price-sensitive market through direct-to-consumer (parents). On top of that, the company plans to overhaul Mathletics with updates — preparing the educational product for market share growth.
A fundies price forecast on this Apple-like hopeful
In an article published on Livewire, Schroders portfolio manager Ray David took a stab at what 3P Learning could be worth in the medium term.
While the company is projecting revenue of $92.3 million to $97.2 million in FY22, David sees the potential for 3P to be pulling $130 million to $150 million in the medium term. This is based on the company landing a few countrywide deals for its software.
From there, the fundie applies an earnings before interest and tax (EBIT) margin of 25%. On an EBIT multiple of 20 times this would place this ASX share between $2.40 to $2.80 apiece. For reference, the current 3P Learning share price is $1.70 — suggesting a potential upside of ~65%.
