Ahead of its fourth quarter results, Echelon Wealth Partners analyst Rob Goff thinks there is still money to be made on AcuityAds (TSXV:AT)
On March 7, AcuityAds will report its fourth quarter and fiscal 2016 results. Goff notes that in mid-January, the company released Q4 guidance of EBITDA of $2.0-million on revenue of $18.0-million far above the then street consensus of EBITDA of $1.3-million on a topline of $12.7-million. He notes that since then, the Q4 consensus has moved in-line with the guidance. The analyst says the company is firing on all cylinders, and its recent acquisition of 140 proof is also delivering.
“The strong pre-released results would clearly suggest above forecast results across each of Managed, Self-Service, and 140 Proof,” says Goff. “We note that following the Q316 results, management stated that 140 Proof was ahead 25% y/y for the quarter – a marked contrast to the relatively flat LTM sales at ~US$10M. However, with 25% sales growth in Q316 and the announcement of two US retailer contracts valued at $1.4M in Q416, we, along with many others, were left thinking the $10M benchmark is likely conservative. We also consider that the 5 sales professionals at 140 Proof are now part of a team of 25, which is expected to grow to over 30 in the next year. While segmented results have not been released, we estimate that Q416 SST revenues were likely ~$9.07M, ahead 148% y/y and building significantly on the Q316 revenues of $3.54M, which were ahead 88% y/y. While we clearly taper growth moving forward, the level of outperformance clearly reflects on strengthened market traction and adoption of the product suite.”
In a research update to clients today, Goff maintained his “Buy” rating and one-year price target of $4.40 on AcuityAds, implying a return of 22.2 per cent at the time of publication.
In fiscal 2017 Goff think the company will post EBITDA of $4.4-million on revenue of $58.6-million.