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Avigilon gets price target raise at Haywood after blowout Q3

Avigilon
Avigilon
Avigilon CEO Alexander Fernandes

A quarter that “blew past consensus” has Haywood analyst Pardeep Sangha raising his price target on Avigilon (Avigilon Stock Quote, Chart, News: TSX:AVO).

On Tuesday, shares of Avigilon soared, closing up nearly 40 per cent after the company reported Q3 results that bested expectations by a wide margin.

In its Q3, Avigilon earned (U.S.) $3.43-million on revenue of $95.8-million, a topline that was a 32 per cent increase over the same period last year.

“In the strongest quarter in Avigilon’s history, we delivered on our five-year revenue goal, and generated record revenue and profit,” said CEO Alexander Fernandes. “With our revenue goal met, we plan to continue growing with a stronger focus on increasing profitability.”

Sangha notes that Avigilon’s revenue number “blew past” the street consensus of $89.1-million and more than doubled the consensus Adjusted EBITDA number of $8.0-million. The analyst notes that on the conference call to discuss the quarter, management underscored that it would have an increased focus on profitability, having achieved its oft-stated goal of achieving an annual revenue run rate of (C) $500-million.

Sangha says the stock still looks cheap.

“We believe Avigilon is undervalued,” said the analyst. “Avigilon is currently trading at 5.1× EV/EBITDA of our CY17 estimates, which is below the peer group average of 9.3× EV/EBITDA of CY17 consensus estimates. Our target price represents a 10.5× EV/EBITDA multiple to our FY17 Adj. EBITDA estimate, or 8.0x EV/EBITDA multiple of our FY18 Adj. EBITDA estimate.”

In a research update to clients today, Sangha maintained his “Buy” rating on Avigilon, but raised his one-year price target on the stock from (C) $19.00 to $20.00, implying a return of 148.8 per cent at the time of publication.

Sangha believes Avigilon will post Adjusted EBITDA (All figures in USD) of $48.2-million on revenue of $353.2-million in fiscal 2016. He expects these numbers will improve to EBITDA of $67.7-million on a topline of $419.8-million the following year.

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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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