Ahead of the company’s Q1 results, Industrial Alliance Securities analyst Neil Linsdell is feeling bullish about Exco Technologies (TSX:XCT).
On Wednesday, February 1, Exco will report its Q1, 2017 results. Linsdell thinks the company will post EBITDA of $22.3-million on revenue of $142.9-million, a little lower than the street consensus of $22.4-million in EBITDA on a topline of $155.9-million.
The analyst thinks Exco will see continued strength in the automotive market, dragged down somewhat by weakness in C&E segment. Overall, the analyst thinks the company remains undervalued.
“We still like the long-term outlook for the Company,” says the analyst. “Despite the lack of revenue growth in F2017, and potentially volatile short-term results, we still see overall profitability growth and a platform for significant growth in subsequent years. We therefore maintain our Buy recommendation as the Company continues to optimize its business and retains a strong balance sheet with solid free cash flow, supporting an ongoing dividend.”
In a research update to clients today, Linsdell maintained his “Buy” rating and one-year price target of $17.00 on Exco Technologies, implying a return of 61 per cent, including dividend, at the time of publication.
Linsdell believes Exco will generate EBITDA of $95.9-million on revenue of $594.5-million in fiscal 2017. He expects these numbers will improve to EBITDA of $106-million on a topline of $647.9-million the following year.