Heading into the company’s second quarter results, Haywood Securities analyst Pardeep Sangha thinks there is money to be made on AcuityAds (TSXV:AT).
On August 14, after market close, AcuityAds will report its Q2, 2018 results. Sangha is modeling an Adjusted EBITDA loss of $200,000 on revenue of $11.5-million, a take that is in-line with the street consensus.
“We believe Acuity is undervalued,” Sangha says. “Acuity’s current share price offers a compelling entry point for investors given the Company has put the bad partners behind it, shored up its balance sheet and is experiencing growth organically and through acquisitions. Acuity is currently trading at 1.1x EV/Revenue of our CY18 estimates, which is lower than its peer group average which trades at 4.3x EV/Revenue of consensus CY18 estimates. Our target price represents 1.1x EV/Revenue multiple and 8.4x EV/EBITDA multiple of our CY19 forecast.”
In a research update to client today, Sangha maintained his “Buy” rating and one-year price target of $1.50 on AT, implying a return of 32.7 per cent at the time of publication.
Sangha thinks AcuityAds will generate Adjusted EBITDA of $2.0-million on revenue of $52.6-million in 2018.
The analyst detailed the key points he will be looking for from the quarter.
“On the conference call, we will be listening for: 1) updated guidance for Q3 and annual revenue growth; 2) improving gross margins and profitability in the second half of CY18; 3) cost synergies from ADman integration and future cross selling opportunities; 4) Update on M&A activity and pipeline,” he said.
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