Mediagrif is a buy ahead of Q3 results, Laurentian says

Next Tuesday, MDF will report its Q3, 2018 results. Agostino thinks the company will post EBITDA of $6.0-million on sales of $20.5-million, a topline that would be flat year-over-year and in-line with consensus.

While noting that the company’s balance sheet remains healthy, the analyst says he expects EBITDA margins to be compressed.

“We model EBITDA of $6.0M, down 4% YoY on assumed 29.1% margin (in line with consensus),” Agostino says. “Our estimate includes: 1) continued S&M and R&D investments through F2019 including steady re-investment in B2B to refresh platforms and drive organic growth; and 2) reduction in EBITDA drag from Orckestra as the acquisition is expected to move to profitability through F2019. Our margin estimate also weighs on our belief margins are beginning to stabilize in the low 30% range following depressed levels in 1H/C18.”

In a research update to clients today, Agostino maintained his “Buy” rating and one-year price target of $12.00 on MDF, implying a return of 21 per cent at the time of publication.

The analyst thinks Mediagrif will post adjusted EBITDA of $24.6-million sales fo $82.3-million in fiscal 2019. He expects those numbers will improve to EBITDA of $27.0-million on a topline of $86.0-million the following year.