Desjardins analyst Gary Ho said investors should be looking at the “I” in Ag Growth International (Ag Growth International Stock Quote, Chart, News, Analysts, Financials TSX:AFN).
In a research report to clients January 18, Ho maintained his “Buy” rating and price target of $82.00 on AFN, implying a return of 50.2 per cent at the time of publication.
The analyst says there is a big opportunity internationally for AFN that is perhaps being overlooked by investors.
“AFN’s International segment accounts for ~33% of its revenue today but has the potential to contribute ~40–45% in the near to medium term,” he wrote. “AFN is in geographies that are critical food pillars globally, yet are under-invested in ag infrastructure. Product transfers should reap tangible benefits in 2024. Despite near-term softness in Brazil and Australia Farm due to dry conditions, we remain very bullish—our scenario analysis suggests C$4–15 upside (blue-sky scenario +C$18–36) to our C$82 target price.”
Ho believes AFN will post Adjusted EBITDA of $292-million on revenue of $1.6-billion in fiscal 2023. He expects those numbers will improve to Adjusted EBITDA of $310-million on a topline of $1.7-billion the following year.
Ho says AFN has room for growth in Brazil, where it currently has 20 per cent markets share, in India, where its AGI Milltec is the current lead in the Indian rice milling equipment market, and in the EMEA, which he describes as already a “stable contributor” for AFN.
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