On June 9, Mediagrif will report its fourth quarter and fiscal 2015 results. Ezzat says he expects the company will continue its recent margin uptrend and deliver EBITDA of $7.5-million in the fourth quarter on revenue of $18.4-million, slightly ahead of the consensus topline of $18.1-million.
“We take a contrarian view by recommending that investors accumulate a position during quiet M&A periods ahead of a ramp up in activity,” says Ezzat. “Good things come to those who wait. MDF has traded in a step function, with the stock outperforming when acquisitions are announced. Our investment thesis is based on: (i) the Company’s strong track record of value creation through disciplined and accretive acquisitions, (ii) margins expanding driving ROE/ROIC improvement, (iii) the alignment of management’s interests with those of shareholders, and (iv) the attractive valuation levels due in part to investor impatience for M&A.”
In a research update to clients this morning, Ezzat maintained his “Buy” rating and one year target price of $21.50 on Mediagrif, implying a return of 28.8% at the time of publication.