HTL Stock is a buy, Echelon says

Following the company’s most recent acquisition, Echelon Capital Markets analyst Stefan Quenneville has maintained his “Buy” rating on Hamilton Thorne (Hamilton Thorne Stock Quote, Chart, News, Analysts, Financials TSX:HTL)

On October 10, HTL announced it had acquired Belgium-based IVF company Gynetics Medical for approximately (US) $19.8-million.

“”We are excited to welcome Gynetics to the Hamilton Thorne family,” said CEO David Wolf. “This acquisition enhances our presence in the very attractive European ART market, further diversifies our revenue base and increases our percentage of recurring revenues through the sale of additional consumable products, including Gynetics’s ovum pick up needles and embryo transfer catheters. Gynetics is a well established and respected provider of premium clinical and laboratory consumables in the European ART market that shares our total commitment to the highest standards in customer service and quality. From our existing business relationships, the Gynetics staff is well known to us. I am particularly pleased that all Gynetics’s employees will join our team and help drive the growth of the existing Gynetics business.”

Quenneville, who in a research update to clients October 10 maintained his “Buy” rating and $2.45 target, gave his take on the deal.

“HTL today continued its track record of strategic and accretive M&A with the tuck-in acquisition of Belgium-based Gynetics, a leading manufacturer of a wide range of innovative and high-quality In Vitro Fertilization (IVF) devices for ~€18.3 million ($19.4M) or ~7.8x TTM Adjusted EV/ Adj. EBITDA. While we have raised our estimates to include the acquired operations and are now deriving our price target using 2024 estimates (2023 previously), our price target remains the same at C$2.45/shr due to declining comparable multiples. We are maintaining our Buy rating as we continue to expect the attractive growth characteristics of the IVF market and HTL’s strong competitive position within it to reward shareholders over the long-term.”

The analyst thinks Hamilton Thorne will generate Adjusted EBITDA of $12.8-million on revenue of $70.2-million in fiscal 2023. He expects those numbers will improve to EBITDA of $17.1-million on a topline of $80.7-million the following year.