ATS named a “Canada Best Idea” at TD

It’s one of  TD Cowen’s best Canadian stock ideas.

TD Cowen analyst Cherilyn Radbourne October 1, as part of a series of research reports from the firm, bestowed the moniker “Canada Best Ideas”” on ATS Corp (ATS Corp Stock Quote, Chart, News, Analysts, Financials TSX:ATS).

The analyst says ATS is one way for investors to play trends in automation.

“The company leverages its extensive knowledge base/global capabilities to address the sophisticated manufacturing/service needs of multinational customers in attractive markets (life sciences, food & beverage, consumer products, energy, and EVs),” she wrote. “We believe that the stock is one of only a few direct plays on the long-term trend toward automation.”

Radbourne says ATS, despite a share price that is lagging, has performed very well.

“ATS has compounded adj. EBITDA at 25 per cent over the past 5 years, based on high-single-digit organic revenue growth, margin expansion, and strategic M&A,” the analyst added. “A rapid cooling of the EV boom has dampened ATS’s F2025 earning prospects and is largely responsible for an 30-per-cent year-to-date share-price decline. We anticipate that Q2/F25 (September) will mark a near-term earnings trough, and we expect a return to year-over-year earnings growth by Q4/F25, which is not all that far away. Medium- to long-term, we see ATS as very well positioned to benefit from supply chain derisking, labour cost/availability issues, and automation as an enabler of more sustainable manufacturing operations. We are particularly positive on the company’s focus on end markets with high barriers to entry and lower cyclicality (more than 75 per cent of current backlog).”

As reported by the Globe and Mail, Radbourne today maintained her “Buy” rating and 12-month price target of $63.00 on ATS.