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Canaccord Genuity gives Evertz price target raise

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.

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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