Is Altus Group stock a buy?

Following a canceled acquisition, Eight Capital analyst Christian Sgro remains on the fence regarding Altus Group (Altus Group Stock Quote, Chart, News, Analysts, Financials TSX:AIF).

On April 17, Altus Group announced that it had canceled the proposed acquisition of Situs Group’s commercial real estate valuation service due to regulatory approval issues with the FTC.

“We are disappointed that we cannot move forward with a deal we believe would benefit all stakeholders, and contribute towards our efforts to bring greater consistency and transparency of valuations across the [commercial real estate] industry,” CEO Jim Hannon said. “This opportunity would have led to improved compliance reporting of valuations, and provided our clients and their investors with deeper insights on the performance of their CRE assets. Moving forward, Altus Group is strongly positioned to execute on our organic strategy to deliver best-in-class valuation intelligence to our clients.”

The analyst says the development, for him, was mixed.

“With difficulty obtaining regulatory approval, Altus terminated the proposed $250M+ acquisition of Situs Group’s valuation business,” he wrote. “This is a material strategic update, curbing Altus’ inorganic analytics expansion plans. With that said, we think the announcement is ultimately positive for shares today. This is because of Altus’ reduced pro forma debt load and renewed focus on organic priorities, including delivering against the 2024 financial outlook.”

In a research update to clients May 21, Sgro maintained his “Neutral” rating an price target of $50.00 on AIF.

The analyst thinks AIF will post Adjusted EBITDA of $164-million on revenue of $819-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $208-million on a topline of $907-million in fiscal 2025.