Board and management changes at DIRTT Environmental Solutions (TSX:DRT) have Laurentian Bank Securities analyst Elizabeth Johnston feeling cautious about the stock.
This morning, DIRRT announced that Michael Goldstein would take over as interim president and CEO and Peter Henry would fill the role of interim CFO. Scott Jenkins, who was president, CFO and director, has left the company.
“We are pleased to welcome both Michael Goldstein and Peter Henry to DIRTT,” said new executive chairman Mogens Smed. “These changes are an important step in our path as a company and will support our growth ambitions. The board and management team are committed to the success of DIRTT and achieving our full potential.”
Johnston says all these “interim” titles give her pause.
“While the commentary surrounding the changes suggests no specific issue prompted the changes, we remain cautious regarding the abrupt changes to management and near-term uncertainty,” she says.
In a research update to client today, Johnston maintained her “Buy” rating, but lowered her one-year price target on DIRTT Environmental from $8.75 to $7.50, implying a return of 31 per cent at he time of publication.
Johnston thinks DIRTT will generate Adjusted EBITDA of $28.47-million on revenue of $304.8-million in fiscal 2017. She expects those numbers will improve to EBITDA of $51.5-million on a topline of $382.3-million the following year.
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