Investors should accumulate Mediagrif, says Euro Pacific

Investors should take advantage of the current relative quiet of Mediagrif (Mediagrif Stock Quote, Chart, News: TSX:MDF) and acquire shares in the company right now, says Euro Pacific Canada analyst Amr Ezzat.

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.