It has delivered seven consecutive quarter of positive Adjusted EBITDA and Leede Jones Gable analyst Greg McLeish thinks there are many more positives in the future for BuildDirect Technologies (BuildDirect Stock Quote, Chart, News, Analysts, Financials TSXV:BILD).
In a research report January 8, McLeish initiated coverage of BILD with a “Buy” rating and one-year price target of $2.00, implying a return of 264 per cent at the time of publication.
The analyst says new management has transformed the company.
“Since joining BuildDirect as CEO in September 2022, Shawn Wilson has strategically transformed the company which has resulted in a 500bps improvement in gross margin and seven quarters of positive adjusted EBITDA. Over the last 18 months the company has been focused on expanding its Pro-Center footprint and right sizing its e-commerce business,” he wrote. These initiatives are largely complete and management can now re-focus its energy on profitable growth initiatives within the e-commerce division and this should become evident in 2024.”
McLeish thinks BILD will generate EBITDA of $4.20-million on revenue of $73.3-million in fiscal 2023. He expects those numbers will improve to EBITDA of $6.85-million on a topline of $80.0-million the following year.
The analyst says acquisitions are a key part of the company’s growth strategy.
“The flooring industry is very fragmented with independent retailers making up the 65% of the market. This is presenting opportunities for BuildDirect it has identified at least 40-60 potential ‘Pro’ focused acquisition candidates that meet its investment criteria and offer sufficient scale. Owners of independent retailers typically do not have digital capabilities and are attracted to how BuildDirect’s omni-channel strategy will help grow their businesses. With sufficient capital, BuildDirect expects to accelerate the pace of acquisitions and fully roll-out the omni-channel strategy across key markets in the US.”
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