Mediagrif (TSX:MDF) will continue to struggle with organic growth and is expensive for a company that has become dependent on acquisitions to maintain its topline, says Cormark analyst Richard Tse.
On Tuesday, Mediagrif reported its Q3, 2014 results. The company earned $3.01-million on revenue of $16.4-million. Tse notes that the company’s topline was below his expectation of $17.5-million, and its EBITDA of $6.1-million also missed his $6.8-million target.
Tse says Mediagrif is seeing organic revenue declines in the double digits, but is still maintaining a more than healthy valuation of 20x P/E and 4.4x EV/S. That combination means current investors should look at taking profits, says the Cormark analyst.
In a research update to clients yesterday, Tse maintained his “Reduce” rating and lowered his one-year price target on Mediagrif to $17.00, down a dollar from his previous $18.00 target.
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 has grown its revenue from $47.9-million in 2009 to $61.3-million in 2013.
At press time, shares of Mediagrif were up .1% to $18.99.