Exco Technologies looks promising in the long term, says Industrial Alliance

Ahead of the company’s Q1 results, Industrial Alliance Securities analyst Neil Linsdell is feeling bullish about Exco Technologies (Exco Technologies Stock Quote, Chart, News: 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.

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