Is Ionik Corp a buy? (December, 2024)

Following the company’s third quarter results, Eight Capital analyst Adhir Kadve has maintained his “Buy” rating on Ionik Corp (Ionik Corp Stock Quote, Chart, News, Analysts, Financials TSXV:INIK).

On November 28, INIK reported its Q3, 2024 results. The company posted Adjusted EBITDA of $5.6-million on revenue of $44.0-million, a topline that was up 29%, year-over-year.

“We are pleased with our record quarterly Adjusted EBITDA1,” CEO Ted Hastings said. “During the third quarter, we continued to grow revenue and Adjusted EBITDA1 year-over-year, completed another strategically aligned acquisition in Nimble5 and made significant progress with our integration efforts and investment in our Ionik Marketing Cloud. We are positioned well within the industry and, with the addition of Rise4 post quarter end, remain confident in achieving our 2024 goals.”

The analyst summarized the quarter.

“Ionik reported Q3 results yesterday with $44mm in revenue and 13% EBITDA margins and remained acquisitive post the quarter with the purchase of Rise4 last week for ~$20mm,” he wrote. “Pro-forma all of its acquisitions, Ionik has material scale with $222mm in revenue and 15% adj. EBITDA margins,” he wrote. “The company noted that it will now turn its focus on ongoing integration efforts and leveraging its scale to execute on a new GTM motion based on a land-and-expand model to drive organic growth moving forward. To that end, the company noted a formalized go-forward strategy, which will unify its various acquisitions under the “Ionik Marketing Cloud” brand.”

In a research update to clients November 28, Kadve maintained his “Buy” rating and price target of $0.30 on INIK.

The analyst thinks the company will post Adjusted EBITDA of $20.2-million on revenue of $188.0-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $34.5-million on a topline of $230.3-million in fiscal 2025.

“Our target is based on ~5.0x F25E EV/adj. EBITDA. INIK currently trades at 3.6x, a discount to a group of AdTech peers who trade at 14.4x,” Kadve added. “Key risks to our target price and rating include macro uncertainties, execution and integration risk on M&A.”