There’s still upside in AcuityAds, says Echelon Wealth Partners

Ahead of its fourth quarter results, Echelon Wealth Partners analyst Rob Goff thinks there is still money to be made on AcuityAds (AcuityAds Stock Quote, Chart, News:  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.