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Altus Group earns target raise at Eight Capital

AIF stock

A move to get out of the property tax business has Eight Capital analyst Christian Sgro feeling a little more bullish about Altus Group (Altus Group Stock Quote, Chart, News, Analysts, Financials TSX:AIF).

On July 9, AIF announced it would sell its property tax business to Ryan LLC for $700-million.

“This transaction strategically positions Altus Group to focus on the substantial growth opportunities in our core analytics business unit to enhance revenue growth, expand margins and increase cash flows,” CEO Jim Hannon said. “We are monetizing the value of our property tax business today so that we can invest in higher-value growth opportunities at a time when market demand for asset intelligence is accelerating and CRE investment activity is set to pick up. In addition to significantly transforming our company, this transaction improves our financial and strategic flexibility to drive growth and return capital to our shareholders.”

The analyst gave his take on the development.

“We expect this transaction to enhance operational efficiency and strategic clarity, aligning resources and efforts entirely towards the high growth Analytics business,” he wrote. “The all-cash proceeds provide significant balance sheet flexibility, and management noted attractive M&A opportunities in the near-term. Following this material update, we will revisit our thesis and model next month when Altus reports Q2/24 results with a re-focused narrative.

In a research update to clients July 10, Sgro maintained his “Neutral” rating on AIF, but raised his price target on the stock from $50.00 to $55.00.

The analyst thinks the company will post Adjusted EBITDA of $164.0-million on revenue of $819.0-million in fiscal 2024. He expects those numbers will be Adjusted EBITDA of $139.0-million on a topline of $609.0-million in fiscal 2025.

“On our revised estimates, we now apply 2025E EV/EBITDA multiples of 17.0x on Analytics (from 16.0x) and 7.5x on Advisory. Altus currently trades at 16.0x 2025E EV/adj. EBITDA, and our target implies 16.4x on a FD basis. Real estate data and analytics companies trade at 29.7x and service providers trade at 8.1x.”

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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