Avigilon is undervalued, says Haywood

A better than expected quarter has Haywood analyst Pardeep Sangha feeling bullish about Avigilon (Avigilon Stock Quote, Chart, News: TSX:AVO).

Yesterday, Avigilon reported its fourth quarter and fiscal 2015 results. In the fourth quarter, the company earned $12.3-million on revenue of $109.1-million, a 37 per cent topline bump over the $79.5-million the company reported in the same period last year.

We’re pleased to report record-setting financial results for our 2015 fourth quarter and year,” said CEO Alexander Fernandes. “We’re very proud of our financial performance and look forward to setting new records in 2016.”

Sangha, who notes that the company beat the street’s expectations handily, says there is no single reason Avigilon is doing well, rather, he says the company is performing well in all industry segments. He says the decline in the company’s shares over the past year represents a buying opportunity for investors.

“We believe Avigilon is undervalued given the company’s strong outlook and growth profile. Avigilon is currently trading at 1.5x EV/Revenue and 8.4x EV/EBITDA of our FY16 firecast, which is below its peer group trading at 1.7x EV/Revenue and 10.3x EV/EBITDA. Our target price is based on a 10.0x EV/EBITDA multiple of our FY17 estimates.”

In a research update to clients today, Sangha maintained his “Buy” rating on AVO, but raised his one-year target price on the stock from $21.50 to $22.50, implying a return of 66.9 per cent at the time of publication.

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