DNTL stock keeps “Buy” rating at Desjardins

Ahead of third quarter results, due early in November, Dejardins analyst Gary Ho has maintained his “Buy” rating on Dentalcorp Holdings (Dentalcorp Stock Quote, Chart, News, Analysts, Financials TSX:DNTL).

In a research update to clients October 19, Ho introduced his 2025 forecast for DNTL, while lowering his price target slightly on the stock. The analyst explained his reasoning.

“We are publishing our preview and introducing 2025 forecasts,” he said. “We expect 3Q revenue and SSSG to be at the lower end of guidance, with 2H acquisitions skewed toward 4Q; we maintain our EBITDA margin. We model DNTL self-funding acquisitions going forward; consequently, deleveraging will be primarily driven by EBITDA growth. We trimmed our target to C$11.50 (from C$12.50) on lower multiples given the contraction in peer valuation. Given its attractive valuation (7.2x 4QF EBITDA), we maintain our Buy.”

Ho’s new price target implied a return of 89.1 per cent at the time of publication.

Ho thinks DNTL will post Adjusted EBITDA of $293-million on revenue of $1.6-billion in fiscal 2024. He expects those numbers will improve to EBITDA of $329-million on a topline of $1.7-billion the following year.

As for the upcoming third quarter, Ho says he expects Adjusted EBITDA of $62.3-million on revenue of $341-million, slightly below the street consensus.

“We view DNTL as a quality compounder given its (1) proven M&A playbook in a fragmented market; (2) organic growth outlook; (3) compelling financial profile with resilient top-line growth and growing cash flows; and (4) recession-resistant attributes,” the analyst concluded.