It has been a strong performer this year, but ahead of the company’s third quarter results, Haywood Securities analyst Pardeep Sangha thinks there is still plenty of money to be made on Avigilon (TSX:AVO).
Today, after market close, Avigilon will report its Q3, 2017 results. Sangha thinks the company will generate Adjusted EBITDA of $20.3-million on revenue of $114.3-million, numbers that are better than the street consensus of EBITDA of $18.5-million on revenue of $107.8-million. The analyst says he will be looking at a number of developments in the quarter.
“On the conference call, we will be listening for: Update on annual guidance. Our annual forecast of 18% revenue growth and 16% Adj. EBITDA margins are within the Company’s guidance for CY17 revenue between $390M and $425M (10% to 20% growth), with Adj. EBITDA margins between 13% and 17%; Details and timing of the sale of its office tower building for $107.5M, which was originally purchased for $42M; Pipeline and growth prospects for the second half of the year; Increasing sales in the Company’s new higher margin products; Update on monetizing the IP and licensing division,” Sangha says.
In a research update to clients Monday, Sangha maintained his “Buy” rating and one-year price target of $25.50 on Avigilon, implying a return of 38.9 per cent at the time of publication.
Sangha thinks Avigilon will generate Adjusted EBITDA of $68.2-million on revenue of $416.7-million in fiscal 2017. He thinks those numbers will improve to EBITDA of $88.9-million on a topline of $477.0-million the following year.
Avigilon’s share price has increased 43% this year. Avigilon is currently trading at 10.8x EV/EBITDA of our CY17 estimates, which is below the peer group average of 16.1x EV/EBITDA of CY17 consensus estimates,” the analyst explains. “Our target price represents a 9.9x EV/EBITDA multiple of our CY18 Adj. EBITDA.”
