DIRTT Environmental’s bought deal was a shrewd move, says Paradigm

DIRTT Environmental’s (DIRTT Environmental Stock Quote, Chart, News: TSX:DRT) decision to raise capital was well timed, says Paradigm Capital analyst Spencer Churchill.

Last Thursday, DIRTT Environmental completed a $43.21-million bought deal financing that was led by Raymond James and included Cormark, National Bank, Beacon, Paradigm, Laurentian and Haywood Securities.

Churchill points out that strong interest in the deal upsized it by 25%, and comes at a time when there is finally a glimmer of hope in the macro picture. He notes that after a weak April Architecture Billings Index (ABI) showing, the numbers on private non-residential spending, a key figure for DIRTT, recently hit a six year high.

“We believe raising equity was a prudent and well-timed move on the company’s part, with the stock up ~130% year-to-date and investor interest in the name at an all-time high. The next catalyst for the stock should be DIRTT Connext, the company’s annual trade show that takes place in Chicago (June 15–17) and where we should get a first look at the company’s residential offerings.

In a research update to clients Friday, Churchill maintained his “Buy” recommendation and $10.50 target price, implying a return of 24% at the time of publication.