AIF’s Q4 doesn’t win over National Bank

Following the company’s fourth quarter results, National Bank Financial analyst Richard Tse remains neutral on Altus Group (Altus Group Stock Quote, Chart, News, Analysts, Financials TSX:AIF).

On February 22, Altus Group reported its Q4 and fiscal 2023 results. In the fourth qiarter, the company posted Adjusted EBITDA of $28.2-million on revenue of $191.6-million, a topline that was up 4.3 per cent over the same period in 2022.

“2023 was a year of significant progress driving revenue, profit and free cash flow growth,” CEO Jim Hannon said. “Looking ahead to 2024 and beyond, I’m excited about our innovation roadmap which will help clients achieve superior asset level and fund performance. Our technology will also drive continued operating efficiencies for our internal teams fuelling better customer service, margins and cashflow generation. With the anticipation of a more stable interest rate environment and increased CRE activity in the second half of 2024, we are well-positioned for success.”

Tse says this was a “mixed” quarter for AIF.

“Consistent with our earnings preview, Altus reported mixed FQ4 results (see Figure 1) with continued softness in new bookings growth,” Tse said. “Bottom line, the challenging macro in CRE not only presents an obvious headwind, but it (also) clouds our ability to assess the underlying segments within AA that will be further clouded by the pending REVS acquisition which comes with acquisition / integration risks. Given that collective take, we’re maintaining our cautious view.”

In a research update to clients February 22, Tse maintained his “Sector Perform” rating and one-year price target of $50.00 on Altus Group, implying a return of 9.3 per cent at the time of publication.

Tse thinks AIF will generate Adjusted EBITDA of $172.3-million on revenue of $823.5-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $202.6-million on a topline of $893.6-million in fiscal 2025.