Ahead of second quarter financials from customized interior environments company DIRTT Environmental Solutions (DIRTT Environmental Solutions News, Stock Quote, Chart TSX:DRT), analyst Elizabeth Johnston of Laurentian Bank Securities is maintaining her “Buy” rating and $10.00 target price, which translated into a projected return of 37.0 per cent at the time of publication.
Calgary-based DIRTT is set to report its fiscal Q2 on Tuesday, July 30, after market close, with the conference call the following day at 10 am.
Johnston says she is looking for quarterly revenue of $90.4 million, which would represent a 12-per-cent year-over-year increase and is in line with the consensus.
DIRTT Environmental keeps “Buy” rating at Laurentian…
The analyst sees the top line growth to be led by an increase in DIRTT’s US segment as well as an FX translation tailwind, while at the same time noting that the company remains underpenetrated in major markets in the US and Canada.
On adjusted EBITDA, Johnston is calling for $9.4 million, representing a margin of 10.4 per cent and a slight improvement year-over-year.
“On the conference call, we will be looking for: (1) Update on the tile warping issue and potential long term solutions, as well as guidance as to any additional costs anticipated in H2/19; (2) Further insight into the timing of the US listing and release of the long-term strategy; and (3) Commentary on key sales vertical and outlook for growth (i.e., Healthcare, Government),” writes Johnston in an equity research update to clients on Wednesday.
The analyst says DIRTT is currently trading at 10.3x forward EV/EBITDA which compares to its office furnishings and building materials peers at 8x and 8.5x, respectively.