A quarter that was “significantly” better than he expected has Canaccord Genuity analyst Robert Young raising his price target on Evertz (TSX:ET).
On Tuesday, Evertz reported its Q1, 2018 resuls. The company earned $13.19-million on revenue of $109.0-million, a topline that was up 25 per cent over the same period last year.
Young notes that Evertz best-ever quarter on the topline came against what appears to be a weakening backdrop. The analyst suspects a gift for investors may be on the horizon.
“While competitors have seen weak results amidst a challenging spending environment, Evertz has posted solid results with strong shipments + backlog which we believe is led by continued IP product leadership,” Young says. “Customer demand for new Evertz products, principally its IP and software-defined video networking (SDVN) offering and DreamCatcher continues, and is backed by a recent win with a new US customer for a +$10M IP facility. The balance sheet remains strong with net cash of $71.8M, but there is no sign of a dividend raise. However, we note that Evertz prefers a special dividend as cash accumulates.”
In a research update to clients today, Young maintained his “Buy” rating on Evertz, but raised his one-year price target on the stock from $19.50 to $20.25, implying a return of 16 per cent at the time of publication.
Young thinks Evertz will generate EBITDA of $115.8-million on revenue of $429.8-million in fiscal 2018. He thinks those numbers will improve to EBITDA of $134.1-million on a topline of $468.5-million the following year.
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