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2019 is a transition year for DIRTT Environmental, Industrial Alliance says

DIRTT

DIRTT Ahead of the company second quarter results, Industrial Alliance Securities analyst Neil Linsdell is suggesting investors take a pass of DIRTT Environmental Solutions (DIRTT Environmental Solutions News, Stock Quote, Chart TSX:DRT)

On Tuesday, DRT will report its Q2, 2019 results. Linsdell says he expects the company will post revenue of $89.6-million, a topline that would be up 8.6 per cent over the $80.7-million the company reported in the same period last year.

The analyst says he does expect some pressure on profitability and adds that he sees 2019 as a transition year for DRT.

“With a mostly changed, and beefed up, senior management team, DIRTT is finalizing restructuring efforts and establishing a platform for sustainable growth that will also deliver strong profitability and cash generation,” he says. “Management is planning to present its three- to five-year strategic plan in Q3; although we do not expect any dramatic changes to the existing business plan, we do anticipate more insight into efficiency improvements, capacity additions, and a more focused sales & marketing strategy, towards scaling operations to support growth initiatives. We expect this plan to also establish a roadmap towards a higher growth rate into 2020.”

In a research update to clients today, Linsdell maintained his “Hold” rating and one-year price target of $8.50, implying a return of 17.4 per cent at the time of publication.

The analyst thinks DIRTT will post Adjusted EBITDA of $56.9-million on revenue of $386-million in fiscal 2019. He expects those numbers will improve to EBITDA of $65.7-million on a topline of $425-million the following year.

 

 

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About The Author /

Nick Waddell
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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