Following Q3 results, Cormark downgrades Mediagrif

On Tuesday, Mediagrif (TSX:MDF) reported its Q3, 2013 results. The company earned $3.47-million on revenue of $15.1-million.

Cormark analyst Richard Tse says Mediagrif’s topline fell below his expectations, which was for $15.4-million, and the street’s, which was $15.6-million. The company’s EBITDA of $6.1-million was also below his $6.6-million estimate and the street’s $6.3-million.

Tse says these results reveal a stock that in pricing in high expectations, but has significant challenges in front of it. In a research update to clients Thursday, Tse downgrading Mediagrif from Market Perform to Reduce, but maintained his price target of $18.

Founded in 1996, Longueuil, Quebec-based Mediagrif offers a range of e-commerce services through B2B platforms such as The Broker Forum, Power Source Online, and Carrus Technologies. The company became increasingly profitable as it grew its revenue from $47.9-million in 2009 to $53.8-million in 2012.

Tse says strong cost controls have led to Mediagrif’s profitability, but the company is caught on an “attrition treadmill”. He says he is waiting on a clearly defined topline growth strategy.

Shares of Mediagrif closed today up .1% to $19.46.

________________