Laurentian lowers price target on Mediagrif

Softer bottom line numbers in its fourth quarter have Laurentian Bank Securities analyst Nick Agostino lowering his price target on Mediagrif (Mediagrif Stock Quote, Chart, News: TSX:MDF).

Yesterday, Mediagrif reported its Q4 and fiscal 2017 results. In the fourth quarter,the company earned $3.6-million or $0.24 a share and posted EBITDA of $6.38-million on revenue of $19.99-million, a topline that was up 6.3 per cent over the same period last year.

Agostino notes that Mediagrif’s Q4 topline slightly bested his expectation of $19.7-million. But the analyst says MDF’s EBITDA fell short of the $7.1-million he had modeled.

“Overall, FQ4 marks the second consecutive quarter of EBITDA underperformance as we witness the drag on profitability from increased opex intended to drive positive organic growth over time,” Agostino says, “At present the B2B platforms (namely MERX, InterTrade and ASC) are performing but growth is being impeded by challenges in the B2C and C2C platforms. Reported EPS was $0.24 vs. $0.25 estimated, but up from $0.16 YoY on lower tax expenses. ”

In a research update to clients today, Agostino maintained his “Buy” rating on Mediagrif, but lowered his one-year price target from $21.00 to $20.00, implying a return of 31.6 per cent at the time of publication.

Agostino thinks Mediagrif will post EBITDA of $29.0-million on revenue of $81.5-million in fiscal 2018.