Ahead of the company’s second quarter results, Industrial Alliance Securities analyst Blair Abernethy thinks the spectacular run of Kinaxis (TSX:KXS) shares should be on pause mode.
On August 3, after market close, Kinaxis will report its Q2, 2017 results. Abernethy thinks Kinaxis will post EPS of $0.24 and EBITDA of $9.2-million on revenue of $34.7-million, in-line with the street consensus of $0.23 in EPS and EBITDA of $9.2-million on a topline of $35.2-million.
Abernethy says that while Kinaxis’s growth is impressive, the stock has gotten ahead of itself. In a research update to clients today, the analyst maintained his “Hold” rating and one-year price target of $78.00 on the stock, implying a return of -3.3 per cent.
“While we believe Kinaxis can sustain its 20%+ top line growth rate, at current levels we believe most of this growth is currently priced into the stock,” the analyst says. “We value Kinaxis on a blended EV/Sales, EV/FCF and DCF basis on 2018E, to arrive at our 12-month price target of C$78.00. The stock is trading at 10.1x EV/Revenue on 2017E, which we consider to be towards the upper end of the range of comparable SaaS/Supply Chain Management vendors.”
Abernethy thinks Kinaxis will post Adjusted EBITDA of $36.9-million on revenue of $142.2-million in fiscal 2017. He expects those numbers will improve to EBITDA of $47.3-million on a topline of $175.6-million the following year.