Tecsys keeps “Top Pick” status at Ventum

Following the company’s third quarter results, Ventum Capital Markets analyst Amr Ezzat has maintained his “Buy” rating and “Top Pick” status on Tecsys (Tecsys Stock Quote, Chart, News, Analysts, Financials TSX:TCS).

On March 5, TCS reported its Q3, 2024 results. The company posted Adjusted EBITDA of $3.5-million on revenue of $45.2-million.

“This quarter, we achieved record revenue driven by strong growth in SaaS. We’re seeing diversified activity across key sectors, from major health systems to healthcare 3PLs as well as industrial distributors. Our pharmacy supply chain solutions continue to drive strong market activity.” CEO Peter Brereton, said.

The analyst gave his assessment of the quarter.

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“Tecsys delivered a solid Q3/F25, with revenue landing in line with our Street-high expectations, while EBITDA was slightly lower on mix—nothing to fret about given the long-term trajectory,” he wrote. “This morning’s earnings call reinforced strong healthcare momentum, with new health system wins and a pharmacy pipeline poised for acceleration as key go-lives approach. While the SaaS transition has temporarily weighed on revenue growth, the business remains in the midst of an earnings inflection, with explosive SaaS growth driving structurally higher profitability (case in point: yesterday’s 3% YoY revenue growth translated into 34% EBITDA growth). With SaaS margins set to expand meaningfully in the coming years, we see a clear path to a quintupling of EBITDA—a story that rewards patience. We reiterate our BUY rating (Top Pick status) and maintain our DCF-derived $52.00/shr price target, implying an 20.1% total return.”

Ezzat thinks TCS will post EBITDA of $13.6-million on revenue of $175.9-million in fiscal 2025. He expects those numbers will improve to EBITDA of $21.6-million on a topline of $199.3-million in fiscal 2026.