Buy ATS ahead of Q4 earnings, Stifel says

Ahead of the company’s fourth quarter earnings report, due May 16, Stifel analyst Justin Keywood says ATS Corp (ATS Corp Stock Quote, Chart, News, Analysts, Financials TSX:ATS) is a buy.

Before the market open Thursday, ATS will report its Q4, 2024 results. The analyst ran down what he will be looking for from them.

“FQ4 Order bookings and update on FQ1/2025 deferred orders will be of focus,” he wrote. “We forecast $698mm in order bookings, down 5% YoY but up 5% sequentially. Our bookings estimate embeds record levels for Life Sciences with strength from GLP-1 automation lines. We forecast $108mm in EV orders, down (57%) YoY but up from $68mm QoQ and seen as positive, given the negative backdrop. A positive outlook would be if ATS reaffirms up to ~$200mm of deferred EV orders for FQ1/2025 delivery. In addition, any specifics on the GLP-1 outlook, could be constructive. ATS’ stock has re-rated from a LTM low of C$41/share in mid-April to C$46 but still at buyback levels. M&A and the diversification of EV/customer concentration continues to be an element of our thesis and could re-rate shares.”

In a research update to clients May 13, Keywood maintained his “Buy” rating and price target of $68.00 on ATS.

The analyst thinks the company will post EBITDA of (C) $464.9-million on revenue of $2.97-billion in fiscal 2024. He expects those numbers will improve to EBITDA of $466.8-million on a topline of 2.97-billion in fiscal 2025.

“Our C$68 target price is based on 16x F2025E EBITDA,” Keywood concluded.