Blackbird PLC (LON:BIRD) is “extremely well placed to take advantage of the clear opportunities for cloud-based editing”, according to analysts at broker Allenby Capital.

In a note initiating coverage of the cloud editing specialist on Monday, the broker said the company’s “relatively fixed cost base and sales growth from partnerships with large-scale global [original equipment manufacturers] should quickly take the business to profitability over the next two years”, adding that the market for the firm’s technology may have been catalysed or accelerated by the coronavirus pandemic.

READ: Blackbird delivers record revenues in first half despite pandemic lockdown

“In our view, Blackbird currently has a strong opportunity to build partnerships with large-scale global OEMs – such as its recent deal with Tata Communications – and public cloud platforms, helped by its growing reputation and increasing brand awareness from prominent deals signed over the last year. Its near-term prospects have been lifted by COVID-19, with the video editing industry more actively exploring remote working, and Blackbird’s typical sales cycle has shortened from 6-9 to 3-6 months”, the broker said.

“We believe OEM partnerships should drive significant revenue growth, with a limited effect on costs, as OEMs resell to their clients and provide first line support, giving a realistic prospect of Blackbird moving into profitability and showing its true potential over the next two years”, they added.

Allenby also said opportunities “may arise for Blackbird to expand its current relationships into larger scale OEM partnerships with the three main public cloud platforms: Microsoft Azure, Google Cloud Platform (GCP) and Amazon Web Services (AWS)”.

“Beyond this, the flexibility of Blackbird’s technology provides scope for OEM partners to commercialise other potentially large-scale applications in the future”, the broker concluded.

Allenby’s upbeat assessment followed Blackbird’s results for the six months ended June 30, 2020 on Monday, where the group reported record revenues of £714,000, up 49% year-on-year, while its underlying (EBITDA) loss narrowed 30% to £714,000.

Blackbird shares were steady at 19.8p in late-afternoon trading on Tuesday.