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Mediagrif Interactive has a 28 per cent upside, says Laurentian Bank

Mediagrif Interactive

Mediagrif Interactive Technologies (Mediagrif Interactive Technologies Stock Quote, Chart TSX:MDF) produced quarterly results which were enough for analyst Nick Agostino of Laurentian Bank Securities Wednesday to maintain his “Buy” rating and $12.00 target price.

E-commerce solutions provider Mediagrif on Tuesday reported fourth quarter fiscal 2019 results that featured sales of $20.8 million, which was in line with Agostino’s estimate of $20.7 million, while the analyst says that the company’s adjusted EBITDA of $5.0 million was below his $5.8 million estimate. The analyst notes that MDF’s EBITDA margin was 24.1 per cent, below his 28.2 per cent estimate and reverting back towards Q1’s 25.2 per cent margin.

“Overall, slightly better than expected organic performance from Orckestra drove the top line results, offsetting weakness at Jobboom and LesPAC,” says Agostino in a client update on Wednesday. “MDF has strategically decided to exit the B2C market, making LesPAC, Reseau and Jobboom available for sale, and has taken a corresponding $35.1 million impairment charge, net of tax.”

Agostino says he likes the move away from the lower margin B2C market.

“We welcome this strategic B2C exit initiative and are hopeful of further B2C asset sales, with the proceeds used to retire remaining debt ($25 million), to invest in the B2B platforms (strategic sourcing including eProcurement, and unified commerce solutions including supply chain collaboration) and for M&A. We believe a successful transition focusing solely on B2B should result in a higher multiple re-valuation over time,” he says.

Agostino’s $12.00 target is derived from a 7.0x multiple of his fiscal 2020 EBITDA estimate and represents a projected 12-month return of 27.9 per cent at the time of publication. The analyst calculates that MDF is trading at 5.8x his NTM EBITDA estimate versus its sector peers at 10.5x, ex-outliers.

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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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