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Mediagrif is undervalued, says Euro Pacific analyst Amr Ezzat

Mediagrif Interactive

mediagrif Investors should take advantage of this quiet M&A period to acquire shares of Mediagrif (TSX:MDF), says Euro Pacific Canada analyst Amr Ezzat.

In a research update to clients this morning, Ezzat maintained his “Buy” rating and one-year target of $21.50 on Mediagrif, implying a return of 23.4% at the time of publication.

On February 10th, Mediagrif will report its Q3, 2015 results. Ezzat expects the company will generate EBITDA of $7.0-million on revenue of $17.3-million, slightly below the street consensus topline of $17.7-million.

Ezzat notes that shares of Mediagrif tend to outperform when the company makes an acquisition, and that it has a strong track record of valuation creation through what he describes as “disciplined and accretive acquisitions”. While things are currently quiet on the M&A front, the analyst thinks investors should accumulate shares of Mediagrif, because he believes it is undervalued compared its competitors.

“Peers are trading at a ~27% premium to MDF on an NTM EBITDA basis, despite MDF’s superior FCF generation, healthier return profile, and best in class EBITDA margins (38.6% LTM vs. peers’ 16.5%),” said Ezzat. “While expected top line growth is slower than that of peers, we note that it does not include acquisitions and MDF is growing EPS at a faster pace than comps. We do anticipate the Company to be acquisitive.”

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.

Shares of Mediagrif closed today up 1.5% to $18.00.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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